AN IN-DEPTH ANALYSIS OF HDFC BANK IN THE FIELD OF MARKETING

TABLE OF CONTENTS
Subject 1) Executive Summary 2) Research Methodology i) ii) iii) iv) v) Primary Objective Research Design Sample Design Scope of the Study Limitations
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Page No. 2 4

3) Critical Review of Literature

4) Company Profile i) ii) 5) Data i) ii) Collection Primary Data Industry Profile SWOT Analysis

31 50 52

iii) Secondary Data 6) Findings & Analysis 7) Recommendations 8) Bibliography 9) Annexure 10) Case Study 71 86 53 66 70

EXECUTIVE SUMMARY
From a modest beginning of Rs 7.1 cores in home loan approvals in its first year of operations to over Rs. 1,00,000 crores in cumulative home loan approvals in 28 years, HDFC has come a long way. As an institution that introduced an unknown concept in the late 1970s, it has defined and spearheaded many of the changes that have given shape to the housing industry through the years and has turned the dream of owning a home into reality for over 2.7 million families across the country. The journey began as a thought that took shape in the mind of HDFCs founder Chairman, Mr. H.T. Parekh, who laid a solid foundation. This thought grew to become a reality in the form of HDFC to enable Indian households access housing in their prime earning days through institutional finance. At the time of its commencement, HDFC was the first private sector housing finance institution in India. Since the early years, it clearly defined the companys core values - integrity, transparency and trust, ingraining it throughout the organization and in all its activities. It focused on a future that it needed to make, rather than wait for it to happen and went on to transform the concept of providing retail finance to middle class families in India into a world class institution. Its success encouraged the creation of a number of housing finance institutions in India. HDFC offers a wide range of deposit products, a secure investment option, with attractive returns. Deposits are accepted from Charitable Trusts, Religious Trusts, Educational Institutions, Employees' Welfare Trusts and others as decided by the management.

The primary objective of the project is to study, understand and analyze various aspects related to the Investment patterns of Trusts and Societies. The research is based on the information collected by the help of the questionnaires filled by various Trusts and Societies visited. The questionnaire was formulated with the aim of finding about the preferences of the societies when they go in for the investment of surpluses generated by them. Due to lack of time the survey was limited to South Delhi. I visited over 250 Trusts and Societies during my survey. An attempt was made to judge on the basis of the response generated, the scope to expand the services of HDFC Ltd. in the area of Trust Deposit. The survey helped to draw a general trend of the investment pattern of the Trusts and Societies.

RESEARCH METHODOLOGY
Primary Objective:
The primary objective is to study, understand and analyze various aspects related to the Investment patterns of Trusts and Societies.

Research Design:
The research is based on the information collected by the help of the questionnaires filled. The first three questions aim at the basic introductory information of the organization and the person being interviewed thus rendering the follow up work easier. The fourth question is about the financial standing of an organization, it gives an idea about the financial status of the society being approached. The fifth question aims at generating information about the various sources of funds of the societies. The sixth and seventh questions deal about the financial performance of the societies. The eighth question is to find out about what a society does with the surplus amount generated by them. The ninth question is meant to gather information about the people who are instrumental in advising and putting to action the investment plans for the society. The tenth question is about what kind of investments are preferred by the society, on the basis of the organization or on the basis of the time period. The eleventh question talks about the institutions in which the societies make their investments in, say the banks or other institutes. The twelfth question tries to assess what is it exactly that the societies look for, while investing. For example do they prefer a high rate of interest, or safety, or location, etc.. Thus the research is based only on the basis of the information gathered with the help of the questionnaires.

Sample design:
The objective is to study the investment pattern of various Trusts and Societies. For this purpose I obtained a list of all the trusts situated in Delhi. Due to lack of time I had to focus my study on all the Societies situated in South Delhi. I made a list of all the trusts situated in the south and targeted them in order to generate the required information.

Scope of the study:

I have focused my study on HDFC Ltd. and based my study primarily on the investment patterns of various Trusts and Societies situated in South Delhi. For this purpose I visited over 250 societies. I interviewed the person concerned and got the questionnaire filled. Even though I visited around 250 societies. I was not able to get the required information from all of them as many of them refused to provide me with any information giving no reason at all reasons.

Limitations:
There is no authenticity of the data available. No way of accessing the truth of the statement. The people who have filled the questionnaire might not have provided me with the right information. No statistical tool has been used due to lack of time.

CRITICAL REVIEW OF LITERATURE

Trusts
A trust is an agreement under which money or other assets are held and managed by one person for the benefit of another. Different types of trusts may be created to accomplish specific goals. Each kind may vary in the degree of flexibility and control it offers. The common benefits that trust arrangements offer include: Providing personal and financial safeguards for family and other beneficiaries; Postponing or avoiding unnecessary taxes; Establishing a means of controlling or administering property; and Meeting other social or commercial goals.

Creating A Trust
Certain elements are necessary to create a legal trust, including a trustor, trustee, beneficiary, trust property and trust agreement. The person who provides property and creates a trust is called a trustor. This person may also be referred to as the "grantor," "donor" or "settlor." The trustee is the individual, institution or organization that holds legal title to the trust property and is responsible for managing and administering those assets. If not designated by name, a trustee will be appointed by the court. In some cases, a trustor can serve as the 7

trustee. It is also possible for two or more trustees to serve together, or for both an individual and an organization to act as co-trustees. Separate trustees may also be named to manage different parts of a trust estate. The beneficiary is the person who is to receive the benefits or advantages (such as income) of a trust. In general, any person or entity may be a beneficiary, including individuals, corporations, associations or units of government. The general duties and obligations of the beneficiary, the trustee and the trustor are summarized elsewhere in this pamphlet. To be valid, a trust must hold some property to be administered. The trust property may be any asset, such as stocks, real estate, cash, a business or insurance. In other words, either "real" or "personal" property may constitute trust property (which may also be called the "trust corpus," "trust res," "trust estate" or "trust principal"). Trust property may also include some future interest or right to future ownership, such as the right to receive proceeds under a life-insurance policy when the insured dies (discussed under "Insurance Trusts"). Property is made subject to the trust by transfer to the trustee, commonly called a "gift in trust." The trust agreement is a contract that formally expresses the understanding between the trustor and trustee. It generally contains a set of instructions to describe the manner in which the trust property is to be held and invested, the purposes for which its benefits (such as income or principal) are to be used, and the duration of the agreement.

Trust agreements may be expressed in writing, by oral agreement or may be implied, and the trustor usually has considerable latitude in setting the terms of the trust. To be enforceable, a trust involving an interest in land must be in writing.

Types Of Trusts
Many kinds of trusts are available. Trusts may be classified by their purposes, by the ways in which they are created, by the nature of the property they contain, and by their duration. One common way to describe trusts is by their relationship to the trustor's life. In this regard, trusts are generally classified as either living trusts ("inter vivos" trusts), or testamentary trusts.

Living Trusts
Living trusts are created during the lifetime of the trustor. Property held in a living trust is not normally subject to probate (the courtsupervised process to validate a will and transfer property on the death of the trustor). In Washington, because such property is not subject to probate, it need not be disclosed in the court record and confidentiality may be maintained. Such trusts are widely used because they allow the trustor to designate a trustee to provide professional management. Under some circumstances, living trusts will allow income to be taxed to a beneficiary and result in income tax savings to the trustor. However, it should be noted that income earned by a trust established for a beneficiary under the age of 14 may be taxed at the beneficiary's parent's tax rate. The transfer of property to a living trust may also be subject to a gift tax. 9

Testamentary Trusts
Testamentary trusts are created as part of a will and must conform to the statutory requirements that govern wills. This type of trust becomes effective upon the death of the person making the will (the "decedent") and is commonly used to conserve or transfer wealth. The will provides that part or all of the decedent's estate will go to a trustee who is charged with administering the trust property and making distributions to designated beneficiaries according to the provisions of the trust. Before the trust property becomes subject to the testamentary trust, it will normally pass through the decedent's estate. When the estate is probated, those trust assets will be subject to probate. The assets, which will form the corpus of a testamentary trust, also are potentially subject to an estate and generation-skipping transfer tax at the time of the decedent's death. A testamentary trust gives the trustor substantial control over his or her estate distribution. It also may be used to achieve significant savings in the future. For example, by using a testamentary trust, a trustor can provide for a child's education or can delay the receipt of property by a child until the child gains financial maturity. Moreover, given the proper form of trust, property may be exempted from death taxation on the later death of a trust beneficiary. However, a generation-skipping transfer tax may still apply. Living trusts can be "revocable" or "irrevocable." The trustor may change the terms or cancel a revocable living trust. Upon revocation, the trustor resumes ownership of the trust property.

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In general, a revocable living trust is used when the trustor does not want to lose permanent control of the trust property, is unsure of how well the trust will be administered, or is uncertain of the proper duration for the trust. With a properly drafted revocable trust, you may: 1. Add or withdraw some assets from the trust during your lifetime; 2. Change the terms and the manner of administration of the trust; and 3. Retain the right to make the trust irrevocable at some future time. The assets in this type of trust will generally be includable in the trustor's taxable estate, but may not be subject to probate. An irrevocable living trust may not be altered or terminated by the trustor once the agreement is signed. There are two distinct advantages of irrevocable trusts: 1. The income may not be taxable to the trustor; and 2. The trust assets may not be subject to death taxes in the trustor's estates. However, these benefits will be lost if the trustor is entitled to (1) receive any income; (2) use the trust assets; or (3) otherwise control the administration of the trust in a manner that is inconsistent with the requirements of the Internal Revenue Code. Since a will may be revoked or amended at any time prior to death, a testamentary trust may be changed or canceled. Revisions can be made by drafting a new will or by using a simple document called a

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"codicil" to make changes or additions to your will. However, to be effective, any such modifications must be executed in the same manner required for wills. The trust instrument should be explicit regarding revocability or irrevocability. If it is not, the trust will be considered irrevocable.

Establishing A Trust
Depending on a number of circumstances, trusts may be established orally, in writing or by conduct. Most trusts involve a number of technical legal concepts relating to ownership, taxes and control. A lawyer can assist in explaining options, considering contingencies and preparing documents. In creating a trust, you should consider several factors and obligations, including: Your personal situation, including age, health and financial status; Your family relationships and your family's financial circumstances; Personal financial data: personal property, real estate holdings, securities, and other property as well as your tax situation and any debts or obligations; The purpose of the trust: your goals, or what you hope to accomplish by the arrangement; The type of trust, and how versatile or flexible your plans are. The amount and type of property it will contain; The duration, or how long the trust will last; The beneficiaries and their specific needs;

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Any conditions that must be met by a beneficiary to receive benefits (such as attaining a certain age); Alternatives for disposing of assets in case the trust conditions are not met or circumstances change; and The trustee, and the conditions or guidelines under which he or she will function. Dependency exemptions, capital gains and losses, income, gift, estate and generation-skipping transfer taxes also should be considered when planning certain types of trusts. Likewise, you may want to think about naming alternative or contingent beneficiaries and trustees. Once a trust has been established, a periodic review of the status of the trust is advisable; you may want to obtain professional assistance appropriate to the requirements of the trust.

Location Of A Trust
The location of the trust is usually determined by the residence of either the trustor or the trustee. In deciding where to establish the trust, it must be remembered that each state has different laws governing the operation of trusts and trustees' powers. Circumstances may sometimes warrant moving the trust location. Relocation, called a "change of situs," may be desirable or necessary for either tax or nontax reasons (e.g., the trustee moves to another state). Whether or not a move can be made, and how the move is accomplished, will be dictated by each state's laws.

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DUTIES AND OBLIGATIONS OF A TRUSTEE

A trustee whether an individual or institution holds legal title to the trust property and is given broad powers over maintenance and investment. To ensure that these duties are properly carried out, the law requires that the trustee act in a certain manner. In general, a trustee must: Act in accord with the express terms of the trust instrument; Act impartially, administering the trust for the benefit of all trust beneficiaries; Administer the trust property with reasonable care and skill,

considering both its safety and the amount of income it produces; Maintain complete accounts and records; and Perform taxpayer duties, such as filing tax returns for the trust and paying required taxes. The trustee must administer the trust property only for the designated beneficiaries and may not use trust principal or income for his or her own benefit. In other words, a trustee is usually prohibited from borrowing or buying from the trust, from selling his or her own property to it, and from using the trust assets as collateral for a personal debt. In selecting a trustee you should consider the potential trustee's competence and experience in managing business or financial matters and the potential trustee's availability and willingness to serve. Individuals and certain corporations (or a combination of both) may serve as trustee. Each selection offers distinct advantages and

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drawbacks that should be considered. For example, an institution, such as a bank, usually offers specially trained managers to provide administrative, counseling and tax services. Other typical advantages include the institution's continuity and reliability of service, and its ready availability. Most banks charge a fee for trust services, and some may not want to manage small trusts, so you may want to compare options. As an alternative, an individual, such as a relative, family friend or business associate, may serve as trustee. An individual, unlike an institution, may be willing to serve for little or no fee. Furthermore, this person could add a more personal touch for special understanding to the needs of the beneficiaries. However, you will want to be certain that any nominated individual has the skill and experience necessary to properly manage the trust property.

Insurance Trusts
Insurance trusts may take various forms, such as business insurance trusts (which may be used to protect the "key men," proprietor or partners of a business), or personal insurance trusts (which involve no business interests). These types of trusts are usually intended to provide assistance in the management of insurance proceeds from estate taxation. Insurance trusts may be revocable or irrevocable, and various types of agreements are available to accommodate an individual's circumstances and desires, or the requirements of a business. Another form of insurance trust is the life-insurance trust. This trust, similar to a living trust, is created to receive proceeds payable under a life-insurance policy. It is normally established to exclude those

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proceeds from taxation in the decedent's estate. A life-insurance trust can also be used to provide a vehicle for continued management and distribution of insurance proceeds for a beneficiary who may need assistance in those matters. To obtain the tax benefits of having the proceeds excluded from the decedent's estate, it is imperative that the insured divest himself or herself of all interest in the policy, and place those rights in the hands of the trustee. For this reason, it is preferable to have an individual other than the insured act as trustee. This type of trust cannot be revocable, and the insured cannot retain any right to trust income. To ensure the tax advantages are retained, it is important that the document be properly drafted. The tax rules in this area are quite complex, so professional legal assistance may be helpful in the preparation of such a document.

Charitable Trusts
A charitable trust is also called a "public trust," because it

benefits immediately or eventually, members of the general public through charitable means. It can offer many tax advantages to the trustor not available to other "private" trusts. Unlike private trusts, it can be established to last indefinitely. Although sometimes complicated in their arrangement, charitable trusts offer considerable flexibility in providing benefits from the trustor or other trust beneficiaries, while at the same time meeting charitable goals. Charitable trusts must be carefully drafted, however, to ensure advantageous tax treatment. A commonly used charitable trust is the "charitable remainder trust."

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Charitable Remainder Trusts

This type of trust allows you to give a future interest in an asset to charity, while keeping an income stream for yourself or for another beneficiary. A trustor may specify that a certain portion of the trust income be distributed to a noncharitable beneficiary for a certain period of time, with the charity to receive the money or property thereafter (e.g., upon the death of the noncharitable beneficiary). In addition to offering an immediate tax deduction for the charitable contribution, the charitable remainder trust can help lower your estate taxes. To qualify for a charitable deduction, specific formats must be followed, and the charitable beneficiary must meet standards set by the Internal Revenue Service. The amount of the charitable deduction is based on complex tax laws that consider such factors as the age of the beneficiary, the value of the property, and the expected income from the trust. Because of the detailed legal concepts and changing IRS regulations, it is advisable to consult a lawyer when considering such arrangements.

Longevity Of A Trust
There is no specified time during which a trust must remain in effect. Each situation must be evaluated separately. In general, however, Washington State law will not allow a private trust to continue longer than 21 years after the death of a person living at the time the trust was established. Charitable trusts, on the other hand, may continue indefinitely.

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Taxes
The use of a trust may help you achieve certain goals, such as reduction of taxes. However, while trusts can offer a number of tax advantages, tax avoidance should not be the sole motivation for using this estate-planning tool. It also should be recognized that the laws governing trusts and their taxation are complex and subject to change. As an example, under the Tax Reform Act of 1986, income earned in a trust which has a beneficiary under the age of 14 will be taxed at that beneficiary's marginal tax rate. This is a significant departure from prior tax law, which provided that such income be taxed to the child at his or her own tax rate, often resulting in little or no tax being due. Because of the new tax rules, an individual contemplating a trust for tax purposes should consult with his or her accountant or attorney to determine whether the trust can be structured in a way to meet the tax objectives. By carefully choosing the proper type of investments within a trust, it may still be possible to accomplish tax goals, but careful planning and drafting are required. These facts, coupled with the numerous financial considerations involved in estate planning, suggest that professional legal and financial assistance may be necessary to help you make an informed decision.

Fees And Costs

The cost of creating and administering a trust can vary considerably, depending on its type and duration. A lawyer's fees to create a trust, for example, will usually be based on the time involved in consulting with you, and in planning and preparing documents. Therefore, before

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you hire a lawyer, you should discuss fees (for example, whether hourly or flat fees are charged). Ask for an estimate or arrange a written fee agreement. A trustee's fee may vary with the skill and expertise the trustee offers. Charges may also be influenced by the size and complexity of the trust estate. This affects the nature and amount of services required, such as record-keeping, asset management and tax planning. In addition to legal and trustee expenses, there may be accounting, real estate management or other service fees. Other common charges include annual, minimum, withdrawal and termination fees.

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HDFC BANKING WITH TRUSTS AND SOCIETIES

Trusts
HDFC offers a wide range of deposit products, a secure investment option, with attractive returns. Deposits are accepted from Charitable Trusts, Religious Trusts, Educational Institutions, Employees' Welfare Trusts and others as decided by the management.

Trusts can choose from any of the following products depending on their need.

Trust Deposits: 1) Fixed Rate Deposits

Following options are available under Fixed Rate Deposit i) Monthly Income Plan ii) Non-Cumulative Deposits iii) Annual Income Plan iv) Cumulative Deposits

2) Variable Rate Deposits

Variable Rate Deposit is a new addition to the wide range of deposit products offered by HDFC to enable the depositors to take advantage of movements in interest rates. Following options are available under Variable Rate Deposit i) Monthly Income Plan ii) Non-Cumulative Deposits iii) Annual Income Plan iv) Cumulative Deposits

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Benefits of an HDFC Trust Deposit:

1. Highest Safety 2. Attractive Returns 3. Tax Benefits 4. Quick Loan Facility 5. High Service Standards 6. Demand Draft Facility 7. Electronic Clearing Service

Highest Safety:
'FAAA' and 'MAAA' rating affirmed for the eleventh consecutive year by CRISIL and ICRA respectively.

Attractive Returns: HDFC deposits are Available throughout the year and offer Attractive, Assured returns to investors

Tax benefits:

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1. HDFC Trust Deposits is a specified investment under Section 11(5) (ix) of the Income Tax Act, 1961. 2. No tax deduction at source from Interest on deposits upto Rs. 5,000/- per branch in a financial year. Quick Loan Facility: Loan against deposit is available after 3 months from the date of deposit upto 75% of the deposit amount subject to the other terms and conditions framed by HDFC. Interest on such loans will be 2% above the deposit rate.

High Service Standards: Depositors are offered across the counter services for new deposits, renewals, repayments and loan against deposit facility. Further, all enquiries through email, post, telephone and in person are attended to immediately. Demand Draft Facility: Outstation depositors can send demand drafts after deducting demand draft charges. This facility is applicable for places where HDFC does not have an office. Electronic Clearing Service: This facility is provided to depsoitors in select centres whereby the interest will be credited directly to the depositors' bank account. The depositor would receive a credit entry "ECS HDFC" in his passbook/bank statement. Intimation of interest credited would be sent on an annual basis. Your bank will not levy any charge for this facility as per present RBI guidelines. Presently this facility is being offered by us at the following centers

ECS Centres :

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Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, Nasik, New Delhi, Pune and Vadodara

Corporate Governance
The concept of corporate governance is entering a phase of global convergence. The driver behind this is the recognition that companies need to attract and protect all stakeholders, especially investors both domestic and foreign. Global capital seeks its own equilibrium and naturally flows to where it is best protected and bypasses where protection is limited or non-existent. Companies stand to gain by adopting systems that bolster investor trust through transparency, accountability and fairness. The tide of regulation has risen to a high watermark and while there is compelling evidence of financial benefits to companies which adopt good governance practices, it has often been felt that the ethos of corporate governance still needs to sink in. Corporate irregularities continue to plague investors as regulators relentlessly strive to cleanse the system. Financial scandals often prompt an overhaul of regulation. But the efficacy of regulation can get negated when compliance becomes a box-ticking exercise with prohibitive costs. Again, there is no single model of good corporate governance. Principles, values and ethics cannot be typecast into a universal one-size-fits-all framework. Spreading the Word: Changing Rules in Asia, the title of Corporate Governance Watch 2004, an annual collaborative study of the corporate governance landscape of Asian markets undertaken by CLSA Asia Pacific Markets and the Asian Corporate Governance Association

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has concluded that there appears to be a clear correlation between companies and markets with strong corporate governance and superior returns over the long term. According to the study, India ranks among the top three in terms of corporate governance. With increasingly integrated capital markets, good corporate governance is of paramount importance for companies seeking to distinguish themselves in the global economy. HDFC, within its web of relationships with its borrowers, depositors, agents, shareholders and other stakeholders has always maintained its fundamental principles of corporate governance that of integrity, transparency and fairness. For HDFC, corporate governance is a continuous journey, seeking to provide an enabling environment to harmonise the goals of maximising shareholder value and maintaining a customer centric focus. HDFC maintains that efforts to institutionalise corporate governance practices cannot solely rest upon adherence to a regulatory framework. HDFCs corporate governance compass has been its business practices, its values and personal beliefs, reflected in the actions of each of its employees. The Board of Directors fully support and endorse corporate governance practices as per the provisions of the listing agreements as applicable from time to time. The Corporation has complied with the said provisions and listed below is the Report of the Directors of HDFC on Corporate Governance

COMPANY PROFILE

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With years, banks are also adding services to their customers. 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 has 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. HDFC was incorporated in 1977 with the primary objective of meeting a social need that of promoting home ownership by providing longterm finance to households for their housing needs. HDFC was promoted with an initial share capital of Rs. 100 million.

Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner, and to promote home ownership. Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets.

Organisational Goals

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HDFCs main goals are to :The primary objective of HDFC is to enhance residential housing stock and to promote home ownership. To acquire by purchase, lease, exchange, hire or otherwise lands & property or any interest in the same in India. To advance money to any person/ persons, company or corporation, society or association either at interest without, and or with or without any security and in particular to advance money to shareholders of the company or to oth4r persons to enable the person to erect, or purchase, or enlarge, or repair any house or building or any part or portions thereof or to purchase any freehold or leasehold or any lands or estate or property in India upon the terms and conditions as laid by the company. To develop & turn to account any land acquired by the company or in which the company is interested, and in particular by laying out and preparing the same for building purposes, constructing, altering pulling down, decorating, maintaining; furnishing, fitting up and improving buildings, and by planting, paving draining, farming, cultivating, letting on building lease or building agreement, and by advancing money and entering into contracts and agreements of all kinds with builders, tenants and others. Subject to the provisions of the Banking Regulation Act 1949, to receive moneys on deposits, loans or otherwise with or without interest and to secure the same in such manner and on such terms and conditions as the company may think fit and proper and to

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guarantee the debts, obligations and contracts of any person, firm, company, or corporation whatsoever.

To negotiate loans of every description.

To finance or assist in financing the sale of house, buildings, flats, either furnished or otherwise, by way of hire purchase or deferred payment or similar transactions and to institute, enter into, carry on, subsidize finance or assist in subsidizing or financing he sale of these houses, buildings, flats, furnished or otherwise, upon any term whatsoever. Besides these the company has certain objectives incidental or ancillary to the attainment of the main objective. These are : To aid any government, state, or any municipal corporation, or company or association or individual with capital, credit, means or resources for the prosecution of any work, undertakings, project or enterprises which are conducive to all or any of the object of the company. To adopt such means of making known to the business of the company as may seen expedient, and in particular by the advertisement in the press, by circulars, by purchase and exhibition of work, of art of interest, by publication of books and periodicals, by granting prices, rewards and donations. To provide for the welfare of the employees or ex employees of the company and the wives, widows and the children or the dependents of such persons in such manner as the company deems fit and proper. 27

To effect and maintain insurance against loss of or inuuryt to any property of or any persons employed by the company or against any other loss to the company. To undertake and carry on the business in India or abroad of Merchant Banking including consultancy services of all kinds and description, investment counseling, portfolio management, providing of financial and investment assistance, syndication of loans, counseling, and tie-up for project and working capital finance, syndication of financial arrangements wheth4er in domestic or international markets, handling of mergers and amalgamations, assisting in the setting up of joint ventures, foreign currency lending, tax consultancy, underwriting of any securities, whether singly or in consortium and without prejudice to the generality of the foregoing to act as advisors and consultants, managers to the issue of shares, debentures, stocks, bonds and securities.

ORGANISATION AND MANAGEMENT

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HDFC is a professionally managed organisation with a board of directors consisting of eminent persons who represent various fields including policy finance, taxation, construction to deliver and urban policy value & to development. The board primarily focuses on strategy formulation, and control, designed increasing shareholders.

Board of Directors
Mr. D S Parekh - Chairman Mr. Keshub Mahindra - Vice Chairman Ms. Renu S. Karnad - Executive Director Mr. K M Mistry - Managing Director Mr. Shirish B Patel Mr. B S Mehta Mr. D M Sukthankar Mr. D N Ghosh Dr. S A Dave Mr. S Venkitaramanan Dr. Ram S Tarneja Mr. N M Munjee Mr. D M Satwalekar

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FOUNDER OF HDFC Man with a Mission

An extract from the book 'A Tribute' If ever there was a man with a mission it was Hasmukhbhai Parekh, our Founder and Chairman-Emeritus, who left this earthly abode on November 18, 1994. Born in a traditional banking family in Surat, Gujarat, Mr. Parekh started his financial career at Harkisandass Lukhmidass a leading stock broking firm. The firm closed down in the late seventies, but, long before that, he went on to become a towering figure on the Indian financial scene. In 1956 he began his lifelong financial affair with the economic world, as General Manager of the newly-formed Industrial Credit and Investment Corporation of India (ICICI). He rose to become Chairman and continued so till his retirement in 1972. At the ripe age of 60, Hasmukhbhai started his second dynamic life, even more illustrious than his first. His vision for mortgage finance for housing, gave birth to the Housing Development Finance Corporation it was a trend-setter for housing finance in the whole Asian continent. He was a true development banker. His building up HDFC without any government assistance, is itself a brilliant chapter in financial history. His wisdom and warmth drew people from all walks of life to him, for advice, guidance and inspiration.

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A soft spoken man of few words, Mr. Parekh nevertheless held strong and definite views with a quiet conviction. He was always concerned with building bridges, improving and encouraging communication between people.

As Henry W. Longfellow said: Lives of great men all remind us We can make our life sublime, And, departing leave behind us Footprints on the sands of time.

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INDUSTRY PROFILE

History
Banking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank of India being established as "The Bank of Calcutta" in Calcutta in June 1806. Couple of decades later, foreign banks like HSBC and Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due to which banking activity took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank set up in 1865. By the 1900s, the market expanded with the establishment of banks like Punjab National Bank, in 1895 in Lahore; Bank of India, in 1906, in Mumbai - both of which were founded under private onwership. Indian banking sector was formally regulated by Reserve Bank of India from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. The next significant milestone in Indian Banking happened in the late 1960s when the then Indira Gandhi government nationalizd, on 19th July, 1969, 14 major commercial Indian banks, followed by nationalization of 6 more commercial Indian banks in 1980. The stated reason for the nationalisation was more control of credit delivery. After

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this, until the 1990s, the nationalised banks grew at a leisurely pace of around 4%-also called as the Hindu growth of the Indian economy.

Banking Reforms since 1992

Financial sector reforms were initiated as part of overall economic reforms in the country and wide ranging reforms covering industry, trade, taxation, external sector, banking and financial markets have been carried out since mid 1991. A decade of economic and financial sector reforms has strengthened the fundamentals of the Indian economy and transformed the operating environment for banks and financial institutions in the country. The sustained and gradual pace of reforms has helped avoid any crisis and has actually fuelled growth. As pointed out in the RBI Annual Report 2001-02, GDP growth in the 10 years after reforms i.e. 1992-93 to 2001-02 averaged 6.0% against 5.8% recorded during 1980-81 to 1989-90 in the pre-reform period. The most significant achievement of the financial sector reforms has been the marked impovement in the financial health of commercial banks in terms of capital adequacy, profitability and asset quality as also greater attention to risk management. Further, deregulation has opened up new opportunities for banks to increase revenues by diversifying into investment banking, insurance, credit cards, depository services, mortgage financing, securitisation, etc. At the same time, liberalisation has brought greater competition among banks, both domestic and foreign, as well as competition from mutual funds, NBFCs, post office, etc. Post-WTO, competition will only get

33

intensified, as large global players emerge on the scene. Increasing competition is squeezing profitability and forcing banks to work efficiently on shrinking spreads. A positive fallout of competition is the greater choice available to consumers, and the increased level of sophistication and technology in banks. As banks benchmark themselves against global standards, there has been a marked increase in disclosures and transparency in bank balance sheets as also greater focus on corporate governance.

Trends
The Indian banking industry is currently in a transition phase. On the one hand, the public sector banks, which are the mainstay of the Indian banking system, are in the process of consolidating their position by capitalising on the strength of their huge networks and customer bases. On the other, the private sector banks are venturing into a whole new game of mergers and acquisitions to expand their bases. The system is slowly moving from a regime of large number of small banks to small number of large banks. The new era will be one of consolidation around identified core competencies. In India, one of the largest financial institutions, ICICI, took the lead towards universal banking with its reverse merger with ICICI Bank a couple of years ago. Another mega financial institution, IDBI, has also adopted the same strategy and has already transformed itself into a universal bank. This trend may lead to promoting the concept of a financial super market chain, making available all types of credit and

34

non-fund facilities under one roof or specialised subsidiaries under one umbrella organisation.

Growth statistics
Scheduled Commercial Banks (SCBs) in India are categorised into five different groups according to their ownership and / or nature of operation. These bank groups are (i) State Bank of India and its associates (ii) other nationalised banks (iii) regional rural banks(iv) foreign banks and (v) other Indian SCBs (in the private sector). The banking sector witnessed strong growth in deposits and advances during the year 2004-05. As of March 2005, the number of commercial banks stood at 289. The aggregate deposits of SCBs increased from US$ 331 billion in March 2004 to US$ 374 billion in March 2005; credit increased from US$ 185 billion to US$ 242 billion; and investments swelled from US$ 149 billion to US$ 162 billion. Net domestic credit in the banking system has witnessed a steady increase of 17.5 per cent from US$ 445 billion on January 21, 2005 to US$ 523 billion on January 20, 2006. The growth in net domestic credit during the current financial year up to January 20, 2006 was 14.4 per cent. Nationalised banks were the largest contributors to total bank credit at 47.8 per cent as of September 2005. While foreign banks' contribution to total bank credit was low at 6.7 per cent, the contribution of State Bank of India and its associates accounted for 23.8 per cent of the total bank credit. Credit extended by other SCBs stood at 18.9 per cent.

35

Banks and consumer finance

Indian banks, particularly private banks, are riding high on the retail business. ICICI Bank and HDFC Bank have witnessed over 70 per cent year-on-year growth in retail loan assets in the second quarter of 2005-06. Annual revenues in the domestic retail banking market are expected to more than double to US$ 16.5 billion by 2010 from about US$ 6.4 billion at present, says a McKinsey study. The home loan sector is also on a smooth course. The average loan size of home finance companies is increasing. HDFC, the second largest player in the home finance business, has seen average loan increase from US$ 10,773 in FY04 to US$ 13,467 in FY05, a change of almost 25 per cent. For ICICI Bank, which is the largest player in the business, the average ticket size is about US$ 13,467 US$ 15,711 and has increased by 10-15 per cent over last year. Foreign banks are working on expanding their bases in the country. The Ministry of Finance and Reserve Bank of India have agreed to allow foreign banks to open 20 branches a year as against 12 now. At present, 40 odd foreign banks have over 225 branches in India. At the end of 2004-05, the total assets of foreign banks aggregated US$ 30 billion or 6.9 per cent of the assets of all scheduled commercial banks. They will also be allowed 74 per cent stake in private banks. After 2009, the local subsidiaries of foreign banks will be treated on par with domestic banks.

Challenges facing Banking industry in India

The banking industry in India is undergoing a major transformation due to changes in economic conditions and continuous deregulation. These multiple changes happening one after other has a ripple effect 36

on a bank trying to graduate from completely regulated sellers market to completed deregulated customers market.

Deregulation: This continuous deregulation has made the Banking market extremely competitive with greater autonomy, operational flexibility, and decontrolled interest rate and liberalized norms for foreign exchange. The deregulation of the industry coupled with decontrol in interest rates has led to entry of a number of players in the banking industry. At the same time reduced corporate credit off take thanks to sluggish economy has resulted in large number of competitors battling for the same pie. New rules: As a result, the market place has been redefined with new rules of the game. Banks are transforming to universal banking, adding new channels with lucrative pricing and freebees to offer. Natural fall out of thist. skill building has led to a series of innovative product offerings catering to various customer segments, specifically retail credit. Efficiency: This in turn has made it necessary to look for efficiencies in the business. Banks need to access low cost funds and simultaneously improve the efficiency. The banks are facing pricing pressure, squeeze on spread and have to give thrust on retail assets. Diffused Customer loyalty: This will definitely impact Customer preferences, as they are bound to react to the value added offerings. Customers have become demanding and the loyalties are diffused.

37

There are multiple choices, the wallet share is reduced per bank with demand on flexibility and customization. Given the relatively low switching costs; customer retention calls for customized service and hassle free, flawless service delivery. Improving profitability: There is increasing competition and

narrowing of spreads and it is having an impact on the profitability of banks. The challenge for banks is how to manage with thinning margins while at the same time working to improve productivity which remains low in relation to global standards. This is particularly important because with dilution in banks equity, analysts and shareholders now closely track their performance. Thus, with falling spreads, rising provision for NPAs and falling interest rates, greater attention will need to be paid to reducing transaction costs. This will require tremendous efforts in the area of technology and for banks to build capabilities to handle much bigger volumes. Risk management: The deregulated environment brings in its wake risks along with profitable opportunities, and technology plays a crucial role in managing these risks. In addition to being exposed to credit risk, market risk and operational risk, the business of banks would be susceptible to country risk, which will be heightened as controls on the movement of capital are eased. In this context, banks are upgrading their credit assessment and risk management skills and retraining staff, developing a cadre of specialists and introducing technology driven management information systems.

38

Corporate governance: Besides using their strengths and strategic initiatives for creating shareholder value, banks have to be conscious of their responsibilities towards corporate governance. Following financial liberalisation, as the ownership of banks gets broadbased, the importance of institutional and individual shareholders will increase. In such a scenario, banks will need to put in place a code for corporate governance for benefiting all stakeholders of a corporate entity. Misaligned mindset: These changes are creating challenges, as employees are made to adapt to changing conditions. There is resistance to change from employees and the Seller market mindset is yet to be changed coupled with Fear of uncertainty and Control orientation. Acceptance of technology is slowly creeping in but the utilization is not maximised. Competency Gap: Placing the right skill at the right place will determine success. The competency gap needs to be addressed simultaneously otherwise there will be missed opportunities. The focus of people will be on doing work but not providing solutions, on escalating problems rather than solving them and on disposing customers instead of using the opportunity to cross sell.

39

Investment in India - Banking System

The last decade witnessed the maturity of India's financial markets. Since 1991, every governments of India took major steps in reforming the financial sector of the country. The important achievements in the following fields is discussed under serparate heads: Financial markets Regulators The banking system Non-banking finance companies The capital market Mutual funds Overall approach to reforms Deregulation of banking system Capital market developments Consolidation imperative

Now

let

us

discuss

each

segment

seperately.

Financial Markets
In the last decade, Private Sector Institutions played an important role. They grew rapidly in commercial banking and asset management business. With the openings in the insurance sector for these institutions, they started making debt in the market.

40

Competition among financial intermediaries gradually helped the interest rates to decline. Deregulation added to it. The real interest rate was maintained. The borrowers did not pay high price while depositors had incentives to save. It was something between the nominal rate of interest and the expected rate of inflation.

Regulators
The Finance Ministry continuously formulated major policies in the field of financial sector of the country. The Government accepted the important role of regulators. The Reserve Bank of India (RBI) has become more independant. Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) became important institutions. Opinions are also there that there should be a super-regulator for the financial services sector instead of multiplicity of regulators.

The Banking System

Almost 80% of the business are still controlled by Public Sector Banks (PSBs). PSBs are still dominating the commercial banking system. Shares of the leading PSBs are already listed on the stock exchanges. The RBI has given licences to new private sector banks as part of the liberalisation process. The RBI has also been granting licences to industrial houses. Many banks are successfully running in the retail and consumer segments but are yet to deliver services to industrial finance, retail trade, small business and agricultural finance.

The PSBs will play an important role in the industry due to its number of branches and foreign banks facing the constrait of limited number of branches. Hence, in order to achieve an efficient banking system, the onus is on the Government to encourage the PSBs to be run on professional lines.

41

Development Finance Institutions

FIs's access to SLR funds reduced. Now they have to approach the capital market for debt and equity funds. Convertibility clause no longer obligatory for assistance to corporates sanctioned by term-lending institutions. Capital services adequacy such as norms extended to financial asset institutions. and

DFIs such as IDBI and ICICI have entered other segments of financial commercial banking, management insurance through separate ventures. The move to universal banking has started.

Non-Banking Finance Companies

In the case of new NBFCs seeking registration with the RBI, the requirement of minimum net owned funds, has been raised to Rs.2 crores. Until recently, the money market in India was narrow and

circumscribed by tight regulations over interest rates and participants. The secondary market was underdeveloped and lacked liquidity. Several measures have been initiated and include new money market instruments, strengthening of existing instruments and setting up of the Discount and Finance House of India (DFHI).

The RBI conducts its sales of dated securities and treasury bills through its open market operations (OMO) window. Primary dealers bid for these securities and also trade in them. The DFHI is the principal agency for developing a secondary market for money market

42

instruments and Government of India treasury bills. The RBI has introduced a liquidity adjustment facility (LAF) in which liquidity is injected through reverse repo auctions and liquidity is sucked out through repo auctions. On account of the substantial issue of government debt, the giltedged market occupies an important position in the financial set- up. The Securities Trading Corporation of India (STCI), which started operations in June 1994 has a mandate to develop the secondary market in government securities. Long-term debt market: The development of a long-term debt market is crucial to the financing of infrastructure. After bringing some order to the equity market, the SEBI has now decided to concentrate on the development of the debt market. Stamp duty is being withdrawn at the time of dematerialisation of debt instruments in order to encourage paperless trading.

The Capital Market

The number of shareholders in India is estimated at 25 million. However, only an estimated two lakh persons actively trade in stocks. There has been a dramatic improvement in the country's stock market trading infrastructure during the last few years. Expectations are that India will be an attractive emerging market with tremendous potential. Unfortunately, during recent times the stock markets have been constrained by some unsavoury developments, which has led to retail investors deserting the stock markets.

43

Mutual Funds
The mutual funds industry is now regulated under the SEBI (Mutual Funds) Regulations, 1996 and amendments thereto. With the issuance of SEBI guidelines, the industry had a framework for the establishment of many more players, both Indian and foreign players. The Unit Trust of India remains easily the biggest mutual fund controlling a corpus of nearly Rs.70,000 crores, but its share is going down. The biggest shock to the mutual fund industry during recent times was the insecurity generated in the minds of investors regarding the US 64 scheme. With the growth in the securities markets and tax advantages granted for investment in mutual fund units, mutual funds started becoming popular. The foreign owned AMCs are the ones which are now setting the pace for the industry. They are introducing new products, setting new standards of customer service, improving disclosure standards and experimenting with new types of distribution. The insurance industry is the latest to be thrown open to competition from the private sector including foreign players. Foreign companies can only enter joint ventures with Indian companies, with participation restricted to 26 per cent of equity. It is too early to conclude whether the erstwhile public sector monopolies will successfully be able to face up to the competition posed by the new players, but it can be expected that the customer will gain from improved service. The new players will need to bring in innovative products as well as fresh ideas on marketing and distribution, in order to improve the low per capita insurance coverage. Good regulation will, of course, be essential.

44

Overall Approach To Reforms

The last ten years have seen major improvements in the working of various financial market participants. The government and the regulatory authorities have followed a step-by-step approach, not a big bang one. The entry of foreign players has assisted in the introduction of international practices and systems. Technology developments have improved customer service. Some gaps however remain (for example: lack of an inter-bank interest rate benchmark, an active corporate debt market and a developed derivatives market). On the whole, the cumulative effect of the developments since 1991 has been quite encouraging. An indication of the strength of the reformed Indian financial system can be seen from the way India was not affected by the Southeast Asian crisis. However, financial liberalisation alone will not ensure stable economic growth. Some tough decisions still need to be taken. Without fiscal control, financial stability cannot be ensured. The fate of the Fiscal Responsibility Bill remains unknown and high fiscal deficits continue. In the case of financial institutions, the political and legal structures hve to ensure that borrowers repay on time the loans they have taken. The phenomenon of rich industrialists and bankrupt companies continues. Further, frauds cannot be totally prevented, even with the best of regulation. However, punishment has to follow crime, which is often not the case in India.

45

Deregulation Of Banking System

Prudential norms were introduced for income recognition, asset classification, provisioning for delinquent loans and for capital adequacy. In order to reach the stipulated capital adequacy norms, substantial capital were provided by the Government to PSBs. Government pre-emption of banks' resources through statutory

liquidity ratio (SLR) and cash reserve ratio (CRR) brought down in steps. Interest rates on the deposits and lending sides almost entirely were deregulated. New private sector banks allowed to promote and encourage

competition. PSBs were encouraged to approach the public for raising resources. Recovery of debts due to banks and the Financial Institutions Act, 1993 was passed, and special recovery tribunals set up to facilitate quicker recovery of loan arrears. Bank lending norms liberalised and a loan system to ensure better control over credit introduced. Banks asked to set up asset liability management (ALM) systems. RBI guidelines issued for risk management systems in banks encompassing credit, market and operational risks. A credit information bureau being established to identify bad risks. Derivative products such as forward rate agreements (FRAs) and interest rate swaps (IRSs) introduced.

46

Capital Market Developments

The Capital Issues (Control) Act, 1947, repealed, office of the Controller of Capital Issues were abolished and the initial share pricing were decontrolled. SEBI, the capital market regulator was established in 1992. Foreign institutional investors (FIIs) were allowed to invest in Indian capital markets after registration with the SEBI. Indian companies were permitted to access international capital markets through euro issues. The National Stock Exchange (NSE), with nationwide stock trading and electronic display, clearing and settlement facilities was established. Several local stock exchanges changed over from floor based trading to screen based trading

Private Mutual Funds Permitted

The Depositories Act had given a legal framework for the

establishment of depositories to record ownership deals in book entry form. Dematerialisation of stocks encouraged paperless trading. Companies were required to disclose all material facts and specific risk factors associated with their projects while making public issues. To reduce the cost of issue, underwriting by the issuer were made optional, subject to conditions. The practice of making preferential allotment of shares at prices unrelated to the prevailing market prices stopped and fresh guidelines were issued by SEBI. SEBI reconstituted governing boards of the stock exchanges,

introduced capital adequacy norms for brokers, and made rules for

47

making client or broker relationship more transparent which included separation of client and broker accounts.

Buy Back Of Shares Allowed

The SEBI started insisting on greater corporate disclosures. Steps were taken to improve corporate governance based on the report of a committee. SEBI issued detailed employee stock option scheme and employee stock purchase scheme for listed companies. Standard denomination for equity shares of Rs. 10 and Rs. 100 were abolished. Companies given the freedom to issue dematerialised shares in any denomination. Derivatives trading starts with index options and futures. A system of rolling settlements introduced. SEBI empowered to register and regulate venture capital funds. The SEBI (Credit Rating Agencies) Regulations, 1999 issued for regulating new credit rating agencies as well as introducing a code of conduct for all credit rating agencies operating in India.

Consolidation Imperative
Another aspect of the financial sector reforms in India is the consolidation of existing institutions which is especially applicable to the commercial banks. In India the banks are in huge quantity. First, there is no need for 27 PSBs with branches all over India. A number of them can be merged. The merger of Punjab National Bank and New Bank of India was a difficult one, but the situation is different now. No one expected so many employees to take voluntary retirement from 48

PSBs, which at one time were much sought after jobs. Private sector banks will be self consolidated while co-operative and rural banks will be encouraged for consolidation, and anyway play only a niche role. In the case of insurance, the Life Insurance Corporation of India is a behemoth, while the four public sector general insurance companies will probably move towards consolidation with a bit of nudging. The UTI is yet again a big institution, even though facing difficult times, and most other public sector players are already exiting the mutual fund business. There are a number of small mutual fund players in the private sector, but the business being comparatively new for the private players, it will take some time. We finally come to convergence in the financial sector, the new buzzword internationally. Hi-tech and the need to meet increasing consumer needs is encouraging convergence, even though it has not always been a success till date. In India organisations such as IDBI, ICICI, HDFC and SBI are already trying to offer various services to the customer under one umbrella. This phenomenon is expected to grow rapidly in the coming years. Where mergers may not be possible, alliances between organisations may be effective. Various forms of bancassurance are being introduced, with the RBI having already come out with detailed guidelines for entry of banks into insurance. The LIC has bought into Corporation Bank in order to spread its insurance distribution network. Both banks and insurance companies have started entering the asset management business, as there is a great deal of synergy among these businesses. The pensions market is expected to open up fresh opportunities for insurance companies and mutual funds.

49

It is not possible to play the role of the Oracle of Delphi when a vast nation like India is involved. However, a few trends are evident, and the coming decade should be as interesting as the last one.

50

SWOT ANALYSIS
Strengths

Right strategy for the right products.

Superior customer service vs. competitors.

Weaknesses

Great Brand Image Products have required

Some

gaps

in

range

for

certain sectors.

accreditations.

Customer service staff need training.

High

degree

of

customer

satisfaction.

Processes and systems, etc Management insufficient. cover

Good place to work Lower efficient service. response and time with

effective

Sectoral growth is constrained by low unemployment levels and competition for staff

Dedicated workforce aiming at making a long-term career in the field.

51

Opportunities

Profit margins will be good. Could extend to overseas

Threats

Legislation could impact. Great risk involved Very high competition

broadly.

New specialist applications. Could seek better customer deals.

prevailing in the industry.

Vulnerable to reactive attack by major competitors.

Fast-track development

career opportunities

Lack of infrastructure in rural areas could constrain investment.

on an industry-wide basis.

An applied research centre to create opportunities techniques for to

High volume/low cost market is intensely competitive.

developing

provide added-value services

52

DATA
Collection:
Data has been collected from sources like books, periodicals, journals, newspapers, Internet and through the questionnaires.

Primary Data:
The primary data has been collected by raising a questionnaire with a sample size of 65. The questionnaire is based on the evaluation of investment pattern of Trusts and Societies.

Secondary Data:
The secondary data has been collected from various books, magzines, journals, information brochures and internet web sites.

53

FINDINGS & ANALYSIS

The survey helped to draw a general trend of the investment pattern of the various Trusts and Societies

Question no. 1 to 3
The first three questions being self explanatory do not need to be elaborated upon. They aim at the basic introductory information of the organization and the person being interviewed thus rendering the follow up work easier.

Question no. 4
The financial standing of an organization is instrumental in the advisory council deciding upon the investments to be opted for. Further the future decisions regarding the use of the funds generated and important all the more, the decisions relating to the fund raising procedure of the society are reviewed in wake of the correct position of the finances of the society. Hence the forth question which helps to give an idea about the financial status of the society being approached, thus enabling the organization to market the appropriate scheme. 54

Quantitative Analysis
From the responses generated the following results were draw: The societies lying under the category of: Very strong Strong Moderately strong 14% 55% 31%

Moderately Strong

Very Strong Strong Strong Moderately Strong

Very Strong

0%

10%

20%

30%

40%

50%

60%

Conclusion
A good majority of the investors questioned were of the view that the organization they are currently dealing with is financially strong.

55

Question no. 5
The financial position of the society depends a lot on its ability to successfully raise funds for its working. Also a regular and steady source of funds enables the society to successfully manage the expenses and earn a decent amount of surplus that can be apportioned in many ways, one of those ways definitely being investing into some profitable and safe deposit schemes, which forms the base of the survey conducted. Therefore the fifth question aims at generating information about the various sources of funds of the societies approached.

Quantitative Analysis
From the responses generated the following results were drawn: Donations 75% Income from the institutions 4% Aid 8% Others 13%

56

Q5) HOW DOES THE SOCIETY SUSTAIN FINANCIALLY? 75%

80% 70% 60% 50% 40% 30% 20% 10% 0%

Donations Income from the institutions 4% 8% 13% AID (AF) Any others, Please Specify Any others, Please Specify

Donations Income from AID (AF) the institutions

Conclusion
Mainly the source of income has been found to be Donations received by the trusts. The share of other income sources is very low as compared to Donations.

Question no. 6
The funds earned by the society need to be consistent and should be able to meet the expenses of the society satisfactorily. The fact whether the society is able to meet the expenses by the funds raised by them, easily or not, points in the direction of the sound or not so sound position of the society. Thus giving an idea about the surplus or the deficit being earned by the society. particular scheme. Hence the sixth question enables us to judge which societies to approach while targeting a

Quantitative Analysis
From the responses generated the following results were drawn: Yes No 80% 20%

57

NO

20%

YES No

YES

80%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Conclusion
The management of most of the Societies visited accepted that the funds they are collecting, are meeting the expenses satisfactorily.

Question no. 7
The financial consistency of the society is the indicator of the growth of the society. The change in the consistency in any direction, requires the reviewing of the financial policies of the society. The more consistent the society over the longer period, the stronger the financial position of the society. Consistency gives a solid base to the financial working of the society. Hence consistency is the criteria for judgement and has been incorporated in the questionnaire in the form of seventh question. It was observed that the officials did not give a straight forward answer to this question, most of them preferring not to answer the question. The second part in the question which aimed at finding about any significant happenings in the working of the society, good or bad, for 58

such happening affects the working and the financial position of the society. The general response to this question was nothing in particular, with a couple of responses bringing out the good aspects of the changes brought about by certain happenings. It was observed that the officials did not come out with the information about any adverse happening.

Question no. 8
What the societies do with the excess funds is of utmost importance to both the society and the companies that aim to market their schemes to these societies. The amount of excess funds that remain with these societies determines the uses to which it is put. These could be towards the development of the society or for expansion purposes or for investment purposes. Therefore this question has been included to enable the attainment of further information on the investment pattern of the surveyed societies which would form the base for deciding upon the marketing of the offered investment schemes to these societies.

Quantitative Analysis
The results obtained were in the following fashion: The surplus is mainly used for the following purposes: Development Expansion Investment 8% 19% 73%

59

Q8) HOW DO YOU APPORTION THE SURPLUS GENERATED BY THE SOCIETY?

8% 19%

USE IT FOR DEVELOPMENTAL ACTIVITIES PLEASE EXPANSION PURPOSES INVEST MENTS

73%

Conclusion
The surplus generated by the society is mostly being used for making investments. A very small percentage of the societies are using these funds for the expansion activities or developmental activities. It was seen that none of the societies funded to the parent institution The main reason cited for this attitude may be that these societies rely heavily on the interest accrued out of these deposits. In other terms it is there main source of income.

Question no. 9
The ninth question is meant to gather information about people who are instrumental in advising and putting to action the investment plans for the society. These could be people belonging to the accounts and finance department, the trustees or the governing body, auditors, chartered accountants, etc.

Quantitative Analysis
From the responses generated the following results were drawn: Accounts and finance department 60 11%

Chartered accountants/consultants Auditors Trustees or Governing bodies

6% 7% 76%

Q9) WHO IS INSTRUMENTAL IN RECOMMENDING INVESTMENTS IN YOUR SOCIETY?:

11%

6% 7%

76%
ACCOUNTS & FINANCE DEPARTMENT CHARTERED ACCOUNTANTS/CONSULTANTS AUDITORS TRUSTEES/GOVERNING BODY

Conclusion
The trustees or the governing body of the societies play the key role in recommending investments to the society.

Question no. 11
This question aims at gathering information about where these societies like to invest their surplus money. It tries to find out if investments are made only in banks or they are made in other organizations as well. Incase they prefer only the banks then what is the reason behind it. Incase the answer turned out to be negative, then the next part tries to bring out specific preferences of these societies apart from banks.

Quantitative Analysis
61

The results obtained from the first part of the question are: Yes No 88% 12%
Q11) ARE INVESTMENTS MADE ONLY IN BANKS?

YES NO NO 12%

YES

88%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Conclusion
A very large majority of the societies believe in investing their surplus in banks, as they feel that the investments made with the banks are safe and secure and yield a high rate of interest.

Results from the second part are: PSUs Financial institutions UTI Housing Finance Institutions Non Banking Finance Companies 22% 40% 11% 16% 11%

62

Q11B) IN WHICH TYPE OF INSTITUTION IS THE MONEY INVESTED?

11% 16%

22%

11% 40%

PSU'S

FINANCIAL INSTITUTIONS

UTI

HOUSING FINANCE INSTITUTIONS

NON BANKING FINANCE

Conclusion
It is a case with those societies who dont invest in the banks. In such cases the second most favored option is the various financial institutions.

Question no. 10
Each organization or society has its own preferences for investing its excess funds. These preferences and consequent decisions could be guided by certain rules and regulations laid down by the department with which they are registered, along with their own reasons which would justify their investment decisions as being in the best interest of

63

the society. The first part of the question deals with the choices of these societies with regards to the decision for investing in public or private sector.

Quantitative Analysis
The results showed the following: Public sector Private sector 80% 20%

Q10) PREFERENCE OF INVESTORS ON THE BASIS OF THE TYPE OF ORGANISATION?

PRIVATE SECTOR PUBLIC SECTOR 0%

PRIVATE SECTOR 20% 80% 20% 40% 60% 80% 100% PUBLIC SECTOR

Conclusions
A huge majority of the respondents agreed to have made/ willing to make investments in a public sector organisation.

The next part of the question deals with the preferences of the society to invest in various deposit schemes differentiated from each other on the basis of the time period.

Quantitative Analysis
The results showed the following: Long term 32%

64

Medium term Short term

52% 32%

Q10B) PREFERENCE OF INVESTORS ON THE BASIS OF TIME PERIOD?

60% 50% 40% 30% 20% 10% 0%

SHORT RANGE 52% 32% 32% MEDIUM RANGE LONG RANGE

LONG MEDIUM SHORT RANGE RANGE RANGE

Conclusions
Almost half of the responses were in the favour of medium range investments. And approximately one third of the respondents were in the favour of either short range or long range investments.

Question no.12
There are various dimensions which are thoroughly scrutinized before the investment decisions are implemented. Hence the twelfth question tries to assess what is it exactly that the trusts look for, while investing. For example do they prefer a high rate of interest, or better service, or safety, etc.. these are the aspects which are dealt in the last question.

65

Quantitative Analysis
From the responses generated the following results were drawn: Rate of interest Flexibility of Withdrawal Minimum Period of Deposit Minimum Amount for Deposit Safety Ratings Good Service Location of the Institution 95% 50% 50% 50% 90% 80% 70%

66

Q12) How do you rate the following if given a ten point scale, for selecting a particular kind of investment?

LOCATION OF THE INSTITUTION

70%

GOOD SERVICE

85% RATE OF INTEREST FLEXIBILITY OF WITHDRAW MINIMUM PERIOD OF DEPOSIT MINIMUM AMOUNT FOR DEPOSIT SAFETY RATINGS GOOD SERVICE LOCATION OF THE INSTITUTION

SAFETY RATINGS

90%

MINIMUM AMOUNT FOR DEPOSIT

55%

MINIMUM PERIOD OF DEPOSIT

60%

FLEXIBILITY OF WITHDRAW

50%

RATE OF INTEREST

100%

0%

20% 40%

60%

80% 100% 120%

Conclusions
The four most important and critical considerations from the investors point of view found to be are: 1. Rate of interest 2. Safety 3. Good service 4. Location of the institution

67

RECOMMENDATIONS
The following are the points of consideration :It is required that the depositor trust and the potential depositor trust be sent a comparative interest rate table showing the rate of interest being offered by the various housing finance companies and other such institutions. It is so because when HDFC cuts interest rates the media publicizes it widely, while when other housing finance companies do the same it goes unnoticed. This has given an impression to the trusts that HDFC is paying lower rate of interest. The fact that people consider banks to be more safe than any other institution and safety being the most preferred criteria for their selection of investment schemes, HDFC Ltd can bank upon advertising in a manner that emphasizes the companys advantage in this aspect. The role of advertising has been very limited in collecting deposits. This needs to change, for more advertising brings more deposits. The deposit schemes can be advertised to the trusts by post. A brochure giving details of the deposit schemes can be sent to the trusts who have not been participating in the deposit scheme of HDFC. It is known that HDFC is at a disadvantage as are other housing finance companies when it comes to advertising due to the restriction

68

by the NHB. But still the deposits schemes must be advertised within the framework laid down by the NHB. Most people known HDFC as a lending institution and do not know that HDFC also accepts deposits. This fact makes it very important to advertise vigorously, the deposit schemes of the corporation. To increase the goodwill of the corporation further in the minds of the depositors. HDFC should send greetings to its depositors on such occasions as festivals. Small New Year gifts such as cards, calendars, diaries, etc can also be sent to the depositors who place a somewhat large deposit with the corporation.

69

CONCLUSIONS
The trusts can participate in fixed deposits of only those institutions which have the Trustee Security and Benefit Status under Sec. 11(5) (ix)). Due to this legal compulsion the options with the trusts to invest in the fixed deposits gets restricted. All the more, the trusts usually have very large amounts and placing these deposits with small and not very reliable companies is not advisable because of safety reasons. HDFC enjoys a reputation of never having defaulted in its interest payments or refund of deposits. With FAAA & MAAA rating affirmed to the corporation for 11 consecutive years by CRISIL & ICRA

respectively. HDFC holds the Numero Uno position. As was said earlier with the people considering banks to be the safest options for deposits all that HDFC needs to do is to bank upon its unquestionable strength. An awareness needs to be created amongst the masses about the importance of Credit Ratings and what it actually means to earn such credible ratings as FAAA & MAAA for 11 consecutive years which has been a significant achievement of HDFC over the years. The additional questions that formed a part of the post interview discussion brought into light the fact that the people come to know about the various schemes offered by the financial institutions through the newspapers, magazines and journals. With the response available,

70

it was seen that HDFC needs to strengthen upon the reach of its advertisements. A lot of stress has been laid on spreading the information regarding the fixed deposits schemes in the report. In this context HDFC is constrained because it can advertise only in a statutory format approved by the NHB. But advertising is absolutely essential and the corporation must advertise within the framework prescribed by the NHB. To conclude, it can be said that the biggest asset of HDFC is its goodwill and the corporation must exploit this goodwill to the maximum possible extent to increase the participation of the general public at large and the trust sin particular in its fixed deposits schemes.

71

BIBLIOGRAPHY

1. www.hdfc.com 2. www.nmc.com 3. www.hdfcfunds.com 4. www.google.com 5. www.yahoosearch.com

72

ANNEXURES

73

ANNEXURE-1 Trusts & Societies

S.No. Name 1. 2. Humanity Welfare Foundation National Safai Karamchari Finance & Development Corp. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Panchtarni Retina Associates Eye Foundation Betterment of Human Trust Subhash Sushila Lakhotia Trust Shree Jain Kaushal Suri Jain Khatragachh Dada Bari Trust Bal Vikash Foundation BSB Educational Trust D.V. Nirmal & Mangal Sain Trust Helpage India Indian Society for Training and Development Sanjivani Chinnaya Sewa Trust Council of Architecture Address N-118, G.K.-I B-2, 1st Floor, Enclave Part-II S-525, G.K.-II G.K. Enclave-II S-228, G.K.-II S-228, G.K.-II Jain Dada Bari, R-Block South Ex. Part-II E-63, South Ex Part-I A-68, NDSE Part-I C-3/3 Vasant Vihar Qutab Institutional Area Qutab Institutional Area Qutab Institutional Area 89, Lodhi Estate, Lodhi Road Core 6A, 1st floor, India Habitat Centre, 16. Council Employees 17. 18. of Group Architecture Gratuity Lodhi Road Core 6A, 1st floor, India Habitat Centre, Lodhi Road 53, Lodhi Estate The ICSI House, 22 Institutional Area, Lodhi Road 16 Institutional Area,

G.K.

Scheme Council for Social Development Company Secretaries Benevolent Fund

19. 20.

Namdev Mission Trust Om SAi Sadhna Sansthan 74

Lodhi Road D-138 Defence Colony

21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34.

Namgyal Institute for Research on Ladakhi Arts & Culture Parivar National Federation of Parents Association Rahat Ch. and Medieval Research Trust Social out Reach Foundation D.D. Foundation Trust Society Balaji Ch. Trust Diabetic Self Care Foundation Children Education Foundation Holy Child Trust Bhartiya Yatri Awas Vikas Samiti Pratab Ch. Trust Sukhdevraj Soin Hospital Trust Blue Bells Education Society Chandra Educational & Welfare Society

X-14, Green Park C-4/5, S.D.A., 1st floor C-7/226 S.D.A. N-128, Panchsheel Park N-56, Panchsheel Park C-4, Shivalik, near Malviya Nagar 13, Sheikh Sarai, Phase-I Malviya Nagar C-451, C.R. Park 3-B SFS Block, East of Kailash B-38, Kailash Colony D-50, East of Kailash 164, Kailash Hills, East of Kailash Kailash Colony B-94, Okhla Area

Industrial

35. 36. 37. 38. 39. 40. 41.

Sponge

Iron

Manufacturers

Phase-II IS01, Hemkunt Press 203, Pragati House 47-48 Nehru Place 805/92 Deepali Building, Nehru Place D-1/1 Hauz Khas Q-1A Hauz Khas Enclave K-92, 1st Floor Hauz Khas Enclave 1 Aurobindo Marg Hauz Khas

Associatio Bhandari Ch. Trust CEEFI Supply Centre Trust Gyan Educational Society Centre for Development Human Rights Kali for Women Old Cottonian Association

&

75

42. 43. 44.

NIILM Trust Path Banarsidas Chandiwala Sewa

B-11/66, NC-19 Delhi-Mathura Road A-9, Qutab Institutional Area Chandiwala Estate, Maa Anandmai Marg, Kalkaji USO House, USO Marg Jeet Singh Marg

Smarak Trust Society 45. USO

Annexure-2 Hospitals
S.No. Name 1. 2. 3. 4. 5. 6. Pushpawati Singhania Research Institute Sama Nursing Home Escorts Heart Institute Research Centre Apollo Hospital Venu Eye Institute & Research Centre Indian Radiological & Imaging Association 7. Skan Institute & School of Address Press Enclave Marg Sheikh Sarai II 8, Siri Fort Road Okhla Road Sarita Vihar, DelhiSarai

&

Mathura Road Sheikh Institutional Area IRIA House,

C-5, Qutab Institutional Area Zamindpur, N- Block

76

8. 9. 10. 11. 12.

Dermatology R G Stone Urological Research Institute Well Spring Dr Sharmas Nursing Home Phoenix Hospital National Heart Institute

F-12 East of Kailash A-28 Kailash Colony A-19/A Kailash Colony E-60, GK I 49-50, Community Centre East of Kailash C-10 Green Extension H-11 Green

13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

Focus

Imaging

&

Research

Park Park

Centre Pvt. Ltd Lifeline Laboratory Spring Meadows Hospital Mohinder Hospital Rockland Hospital Max Care AIIMS Safdurjung G.B. Pant Lok Nayak S.S.K. Hospital Kalawati Saran Hospital Ram Manohar Lohia

Extension F-44 East of Kailash C-5 Green Park Extension Qutab Institutional Area Pushp Vihar, Saket

Childrens

77

Annexure-3 Trusts & societies

S.No. Name 1. Stint Trial 2. Health Education 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. Trust Business & Address N-221, G.K.-I B-26, G.K.-I E-46, G.K.-I B-117, G.K.-I B-49, G.K.-I R-9, G.K.-I W-17, G.K.-I S-228, G.K.-I B-75, G.K.-I E-18, G.K.-I B-22, Pumposh Enclave G.K.-I N-217, G.K.-I R-258-A, G.K.-I Benito Juareg Marg Dhaula Kuan A-101, SOS Vihar Sector-13, R.K. Puram West Block-V, R.K. Puram E-410, G.K.-II E- Block Gurudwara G.K.-II

&

Research

Communication

Foundation B.I. Educational Society Balak Ram Puri Charitable Trust Narendra Nath Bhargava Ch. Trust New Delhi Television Jai Fund Ramnivas Asha Rani Lakhotia Trust Dewan Shri Family Charity Trust Bhardwaj Welfare Trust Rameshwari Devi Trust St. Janki Devi Trust Sri Premji Maharaj Ch. Trust Springdale Educational Society Himalayan R&D Society Defence Accounts Sports Control Board Safe Blood Organisation Shri Guru Singh Sabha

78

19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45.

Shri

Bindra

Ban

Dass

Vimal

M-13, G.K.-II S-288, G.K.-II S-228, G.K.-II W-39, G.K.-II M-235, G.K.-II G.K. Enclave Part II M-129, G.K.-II G.K.-II M-14, G.K.-II 210, South Ex. Plaza-I 389, Masjid Moth, NDSE-III C-99, South Ex Part-II C-56, South Ex. Part-II B-48, South Ex. Part-I M-14-B, South Ex. Part-II B-37, South Ex. Part-II C-39, South Ex. Part-II A-9/27, Vasant Vihar E-1/1 Vasant Vihar C-6/4, Vasant Vihar E-4/5 , Vasant Vihar F-4/10, Vasant Vihar 2 Vasant Marg, Vasant Vihar D-319, Vasant Vihar A-51, Vasant Vihar A-10/16, Vasant Vihar B-32, Tara Crescent Qutab Institutional Area Core - 4B, 5th Floor India Habitat Centre Lodhi Road

Kishore Jain Dharmarth Trust Spiritual Clubs International Humanity Welfare Trust Babulal Aggarwal Ch. Trust B.D. Rukhmani Khosla Charitable Trust Ashwat Teerthraj Sammedshikhir Trust National Cancer Institute Bhimsen Shanti Devi Trust Sudesh Madhok Public Ch. Trust Sai Kirpa Hedgewar Smarak Nyas Dental Education Society of India Centra Education Society Bharat Mata Ch. Trust Sundale Educational Society Marchhea Devi Memorial Trust Balfeet Memorial Ch. Trust Chaudhary Raja Ram Jakhar Memorial Pubic Ch. Turst Country First C&N Charitable Trust Guru Amardas Memorail Trust Goodwill Trust and Endownment Fund Parkinsonism and Related

Disorders Awareness Network Shri Kannashankar Nandlal Dave Educationa Trust Sunder Amarsheel Ch. Trust Tara Tak Employees Provident Fund Trust Society for Automotive Fitness & Environment

79

46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65.

Health Fitness Trust BSF Special Relief Fund BSF Contributory Benevolent

B-307, Pragati Alhar Hostle, Lodhi Road Room - 616, Block - 10 CGO Complex, Lodhi Road Room - 616, Block - 10 CGO Complex, Lodhi Road Room - 616, Block - 10 CGO Complex, Lodhi Road Room - 616, Block - 10 CGO Complex, Lodhi Road East Court Zone-4, Core 4 B 2nd floor, India Habitat Centre Jawaharlal Nehru Stadium, Lodhi Road Jawaharlal Nehru Stadium, Lodhi Road Jawaharlal Nehru Stadium, Lodhi Road Lodhi Road C-114, Vasant Kunj D-3, 3306, Vasant Kunj 513 Pocket, C- SCEA Vasant Kunj C-1/1289, Vasant Kunj Flat No. 2128, Sec. 6 Pocket - 2, Vasant Kunj 2303, Sec D-2 Vasant Kunj South Delhi Public School Defence Colony E-22, Defence Colony C-127, Defence Colony D-196, Defence Colony 80

Fund BSF Wives Welfare Association BSF Education Fund Consulting Engineers Association of India Gymnastic Federation of India National Adventure Foundation Sports Authority of India Shri Ramayan Vidya Peeth People Institute for Development & Training Centre for Development & Action Godhyi Bunts Cultural Association Bhartiya Tripureshwari Shakti Peeth Siray Relief And Anilam Welfare South Delhi Educational Society Baijnath Bhandari Public Ch.

Trust Basant Rajmadhu Bhandari Ch. Trust D.. Mehta Ch. Trust

66. 67. 68. 69. 70.

Panos Institute (India) Pvt. Ltd Project Corner Integrational Deviya Nirvan Welfare Ch. Society Dr Mahesh Chandra Gupta Ch. Trust Smt. Ramrakhi Kohli & Hakim Ch.

49, Defence Colony, 1st floor C-38, Defence Colony A-146, Defence Colony D-19, Defence Colony D-399, Defence Colony

Chunnilal 71. 72. 73. 74.

Memorial

Trust Saraswati Ch. Trust Centre for Human Development Leapfrog Jashn-E-Bahar

130-C, Saraswati Niwas Gautam Nagar 99/6 Ekta Appartts, Ground floor, Gautam Nagar A-14, 3rd floor Gulmohar Park 50 - SFS Flats, Appartts Gautam

75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86.

Centre For Agriculture & Rural Development Centre for Development of Travel & Tourism Rattan Chand Punjabi Ch. Trust Dewan Chand Swahney Ch. Trust Bharat Jagrati Morcha Health Care Ch. Trust Hindu Sangam Common Wealth Human Rights Centre for Chronic Disease

Gautam Nagar G-30 Lajpat Nagar Part-II J-59 Lajpat Nagar III A-61 Lajpat Nagar II 34 Lajpat Nagar III M-67, 1st floor Lajpat Nagar II R-23 Green Park G-10 Green Park Extension N-18 1s floor Green Park 17 Green Park Extension 1st floor R-5 Green Park Market K-7 Green Park Extension C-15 Green Park

Control Relan Foundation Country Club

Farmlands

Association Dr (Mrs) Sushila Mehra Ch. Trust

81

87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. 109. 110.

Desa Bhakta Trust Shri Peru Singh Educational & Welfare Society Hospital Welfare Society Deepannita Baisya Memorial Trust Rotary Internationals India

C-6/28 SDA 33-A Yusuf Sarai A-2/171 Safdarjung Enclave C-2/60 Humayunpur Safdarjung Encalve A-2/18 Safdarjung Encalve D-74 Panchsheel Enclave Panchsheel Park 173 A, Khirki Village Malviya Nagar F Block 9/11

National Polio Plus Society CIOLOSOP Trust LRG Foundation Centre for Education Communication Charkha St. Gregories Jacobite

&

Syrian

1st floor Malviya Nagar 33-C Pocket, Sheikh Sarai C-1276, 1st floor C.R. Park G-74 East of Kailash E-164 East of Kailash A-73, East of Kailash Panchvati 215 Kailash Hills E-48/14 Okhla Indl. Area C-124 Okhla Indl. Area 227 Okhla Indl. Estate Phase III Okhla Industrial Area, Phase II CRI House, Jamia Nagar Okhla 209 Okhla Indl. Area Phase III F-1/7 Okhla Indl. Area Phase I 34 Nehru Place Jaju Appartts

Orthrodox Church Society Sansaptak St. Georges Education Society Home for Orphans Radhika Trust Society of Human Values and Universal Responsibilities Seth Ch. Trust Nirmal Society for Educational Bacardi Mutini India Employees Superannuation Fund Houses of Manj Immaalate Delhi Conference of Religious India Parivartan Dayal Foundation Cooperative Rural Development Bairang Lal Jaju Foundation

82

111. 112.
113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. 130.

Dufferin

Rajendra

Old

Cadet

7/18, Nehru Enclave 214 Hemkunt Towers Nehru Place 305 Bakshi House 40-41 Nehru Place
17 - 1B P-8 C Hauz Khas Enclave Ground Floor N-27A, Hauz Khas C-31 Hauz Khas H-8 C Hauz Khas K-2 Hauz Khas A-60 Hauz Khas A-60 Hauz Khas NCUI Auditorium Building 5th floor 28, Old JNU Campus Amna Asaf Ali Marg, Munirka BD 6A, DDA Flats, Munirka 87-A Munirka Village C-45 Mayair Garden, Near Hauz Khas A-73, New Friends Colony A-18, 2nd Floor New Friends Colony D-891 New Friends Colony C-57 New Friends Colony Bhilwara Bhawan 40-41 Community Centre New Friends Colony E-1 Press Enclave, Saket 46-A, MB Appartts MB Road, Saket G-22, Saket J-332 Sarita Vihar 331, Sant Nagar A-14, Mathura Road

Association Bhartiya Cattle Resource

Kanahyalal Dayawati Punj Ch. Trust Shri Mati Vidya Ch. Trust Program of Special Olympus Bharat B.D. Education Society Cancer Detection Society of India Dey Foundation Navdanya Trust Research Foundation for Science Technology & Ecology National Bee Board Centre for Logical Research and Development Studies Cornerstone Community Trust Daya Memorial Ch. Trust Maraj Sani Siyan Singh Ch. Trust Hazari Mal Durga Dutt Ch. Trust Centre for Femenist Legal Research Centre for Cross Cultural

Communication Centre for Himalayan Rural Action Group Bhartiya Jana Kalyan Nidhi

131. 132. 133. 134. 135. 136.

Centre for Advocacy & Research Environment & Development on Line Lok Awaz Prerna Tyagi Foundation Devathi Vidya Peeth

83

137. 138.

Mahaniam

Spintual

Fellowship

Mohan Co-operative Indl. Estate 36/3 Motiram Building Mathura Road Villa - E, Empire Estate Mehrauli 9 Gurgaon Road Holistic Centres, Chattarpur Mandir, Near Sang Kiran D-10 Neb Valley Neb Sarai, Mehrauli C-2 Maharani Bagh 10 Nizamudin East N-42 Nizamudin West 6, Prithvi Raj Road 19, Golf Links 42 Golf Links 42, Tughlakabad Institutiona Area 7 Bikaji Cama Place 131/132 Som Dutt Chamber I Bhikaji Cama Place 1 Tughlakabad Institutional Area

Society Guruji Ka Ashram

139.

Purna

Near Sat

140. 141. 142. 143. 144. 145. 146. 147. 148. 149. 150.

Help Rural India Dr Pushpa Sethi Memorial Trust Bhagwat Devi Gitaram Garg Welfare Trust Saranya Foundation Jindal South West Foundation Shri Rattan Chand Ch. Trust Society for Agriculture & Education PRIA PNB Centemanj Rural Development Trust National Network for India Trust Logical Society of India

CASE STUDY

84

HDFC offers a wide range of deposit products, a secure investment option, with attractive returns. Deposits are accepted from Charitable Trusts, Religious Trusts, Educational Institutions, Employees' Welfare Trusts and others as decided by the management. Trusts can choose from any of the following products depending on their need. Trust Deposits: 1) Fixed Rate Deposits Following options are available under Fixed Rate Deposit i) Monthly Income Plan ii) Non-Cumulative Deposits iii) Annual Income Plan iv) Cumulative Deposits

2) Variable Rate Deposits Variable Rate Deposit is a new addition to the wide range of deposit products offered by HDFC to enable the depositors to take advantage of movements in interest rates.

i) ii) iii) iv)

Monthly Income Plan Non-Cumulative Deposits Annual Income Plan Cumulative Deposits

Benefits of an HDFC Trust Deposit:

85

1. Highest Safety 2. Attractive Returns 3. Tax Benefits 4. Quick Loan Facility 5. High Service Standards 6. Demand Draft Facility 7. Electronic Clearing Service Highest Safety: 'FAAA' and 'MAAA' rating affirmed for the eleventh consecutive year by CRISIL and ICRA respectively. Attractive Returns: HDFC deposits are Available throughout the year and offer Attractive, Assured returns to investors. Tax benefits: 1. HDFC Trust Deposits is a specified investment under Section 11(5) (ix) of the Income Tax Act, 1961. 2. No tax deduction at source from Interest on deposits upto Rs. 5,000/- per branch in a financial year. Quick Loan Facility: Loan against deposit is available after 3 months from the date of deposit upto 75% of the deposit amount subject to the other terms and conditions framed by HDFC. Interest on such loans will be 2% above the deposit rate. High Service Standards: Depositors are offered across the counter services for new deposits, renewals, repayments and loan against deposit facility. Further, all enquiries through email, post, telephone and in person are attended to immediately.

86

Demand Draft Facility: Outstation depositors can send demand drafts after deducting demand draft charges. This facility is applicable for places where HDFC does not have an office. Electronic Clearing Service: This facility is provided to depsoitors in select centres whereby the interest will be credited directly to the depositors' bank account. The depositor would receive a credit entry "ECS HDFC" in his passbook/bank statement. Intimation of interest credited would be sent on an annual basis. Your bank will not levy any charge for this facility as per present RBI guidelines. Variable Rate Deposit is a new addition to the wide range of deposit products offered by HDFC to enable the depositors to take advantage of movements in interest rates. It is available with monthly, quarterly, half yearly, annual and cumulative interest options. Deposit placed under variable rate deposit cannot be changed to fixed rate deposit before the maturity date. Rate of Interest The rate of interest on variable rate deposit is linked to the Benchmark Rate and will vary from time to time with the Benchmark Rate. Benchmark Rate is the rate of interest applicable on HDFC Fixed Rate deposit product for the corresponding period. Rate of Interest (ROI) will be reset at the beginning of each interest period. ROI prevailing on the first day of the interest period will be applicable for the entire interest period. For e.g. If a 3-year quarterly deposit is placed on 01/10/04, interest rate for the period from 01/10/04 to 31/12/04 will be the ROI 87

prevalent on 01/10/04 for a 3-year Fixed Rate quarterly deposit product. Similarly, interest rate applicable for the next quarter from 01/01/05 to 31/03/05 will be the ROI prevalent on 01/01/05 for a 3year Fixed Rate quarterly deposit product. FIXED RATE DEPOSITS Interest Rates Applicable from June 01, 2006 ANNUAL INCOME PLAN Rate of Interest Period (Months) payable (% p.a.)* 12 - 59 7.50% 60 - 84 7.75% Min. Dep. Amt.(Rs.) 10,000/0.25% p.a more for Deposits of Rs.10 lac and above for 36-84 months till June 30, 2006

CUMULATIVE DEPOSITS Period (Months) Rate of Interest payable (% p.a.)* 7.50% 7.50% 7.50% 7.50% 7.75% 7.75% 7.75% Maturity Amount for a Deposit of Rs. 1000/- * 1,075.00 1,155.63 1,242.30 1,335.47 1,452.40 1,564.96 1,686.25

12 24 36 48 60 72 84 Min. Dep. Amt.(Rs.) 10,000/-

88

0.25% p.a more for Deposits of Rs.10 lac and above for 36-84 months till June 30, 2006 MONTHLY INCOME PLAN Rate of Interest payable (% p.a.)* 7.25% 7.50%

Period (Months)

12 - 59 60 - 84 Min. Dep. Amt.(Rs.) 20,000/-

0.25% p.a more for Deposits of Rs.10 lac and above for 36-84 months till June 30, 2006 NON-CUMULATIVE DEPOSITS - HALF YEARLY Rate of Interest Period (Months) payable (% p.a.)* 12 - 59 7.35% 60 - 84 7.60% Min. Dep. Amt.(Rs.) 10,000/0.25% p.a more for Deposits of Rs.10 lac and above for 36-84 months till June 30, 2006 NON-CUMULATIVE DEPOSITS - QUARTERLY Rate of Interest Period (Months) payable (% p.a.)* 12 - 59 7.30% 60 - 84 7.55% Min. Dep. Amt.(Rs.) 10,000/How can we make the procedure of trust deposits more attractive and appealing?

89