American Journal of Multidisciplinary Research & Development (AJMRD)

Volume 06, Issue 09 (September - 2024), PP 50-62

ISSN: 2360-821X
www.ajmrd.com

Research Paper Open Access

A STUDY ON FINANCIAL PERFORMANCE OF HDFC BANK

IN INDIA
Dr. I.CHITRA
ASSISTANT PROFESSOR OF ECONOMICS, THIAGARAJAR COLLEGE,MADURAI-09

1.1 Introduction:
Its experience in the financial markets, a strong market reputation, large shareholder base and unique
consumer franchise. HDFC was ideally post. The Housing Development Finance Corporation limited (HDFC) was
amongst the first to receive an in principle approval from the RESERVE BANK OF INDIA (RBI) to set up a bank
in the private sector, as part of the RBI‟s liberalization of the Indian banking industry in 1994. The bank was
incorporated in august 1994 in the name of „HDFC BANK LIMITED‟, with its registered office in Mumbai, India.
HDFC BANK commenced operations as a scheduled commercial bank in January 1995. HDFC is India‟s premier
holding finance company and enjoys an impeccable track record in India as well as in international markets. Since
its inception in 1997, the corporation has maintained a consistent ad healthy growth in its operations to remain the
market leader in promotes a bank in the Indian environment. Mortgages. Its outstanding loan portfolio covers well
over a million dwelling units.
HDFC has developed significant expertise in retail mortgage loans to different marker segments and also has a large
corporate client base for its housing related credit facilities. With toned to
HDFC Bank began operations in 1995 with a simple mission: to be a “world class Indian bank” We realized that
only a single minded focus on product quality and service excellence would help us get there. Today, we are proud
to say that we are well on our way towards that goal.
HDFC Bank Limited (the Bank) is an India- based banking company engaged in providing a range of banking and
financial services, including commercial banking and treasury operations. The bank has a network of 1412 branches
and 3295 automated teller machines (ATMs) in 528 cities and total employees are 52687.
Finance is the master key in that unlocks all production and merchandise opportunities. For the preparation
and administration of financial decisions, financial success is critical. It is a method of determining how well a firm
uses its assets from its core business mode to generate money, as well as a method of determining an organization's
overall financial health over time. Every business, large, medium, or small, requires funding to continue operations
and meet its goals. Finance is so important nowadays that it is rightfully referred to as the “living blood" of
businesses. No business can achieve its goals without enough funding. As a result, the study of financial
performance is critical, as it is the process of calculating the financial results of a company's operations. Financial
performance analysis is the process of determining a company's financial strengths and weaknesses by
correctly defining the relationship between balance sheet and profit and loss account components. It also aids in
short- and long-term forecasting, as well as the identification of growth through the use of various financial
techniques in financial performance analysis. In the development of the Indian economy, the bank plays a critical
role. In emerging countries, a sound and efficient banking sector provides the required financial inputs to the
economy. It also assesses an organization's overall financial health over a period of time. The financial
performance of an organization is concerned with the bank's financial strengths and weaknesses, as well as the
relationship between the balance sheet and the income statement
Financial performance is the process of measuring how effectively a company utilizes its assets from
primary mode of business to raise incomes it also measures organizations whole financial health over a particular
period of time. Financial performance of the organization deals with the financial strength and weaknesses of bank
accurately establishing a relationship between the balance sheet and income statement. This process used to clearly
understand the growth of long-term and short-term of bank. There are several ways to analyze data the researcher
used ratio analysis in this research. This analysis also helpful determines the credit worthiness of the bank to
evaluate the market position among the competitors.

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 A STUDY ON FINANCIAL PERFORMANCE OF HDFC BANK IN INDIA

1.2 HISTORY OF HDFC BANK:

HDFC Bank Limited (Housing Development Finance Corporation) was incorporated in August 1994 with
its registered office in Mumbai, India. HDFC Bank commenced operations as a scheduled commercial bank in
January 1995. HDFC was amongst the first to receive an „in principle‟ approval from the Reserve Bank of India
(RBI) to set up a bank in the private sector. The bank at present has an enviable network of over 4,805 branches
spread over cities across India. All branches are linked on an online real time basis. Customers in over 500 locations
are also servicing through telephone banking. The bank also has a network of about over 12,860 networked ATMs
2,657 across cities and towns. HDFC Bank provides a number of products and services including wholesale banking
and retail banking, treasury, auto loans, two wheeler loans, personal loans, loans against property, consumer durable
loans, life style loan, credit cards and the various digital products.
1.3 HDFC BANK IN INDIA:
HDFC Bank Limited is an Indian banking and financial services company headquartered in Mumbai. It is
India's largest private sector bank by assets and the world's 10th-largest bank by market capitalization as of April
2021. It is the third largest company by market capitalization of $122.50 billion on the Indian stock exchanges. It is
also the fifteenth largest employer in India with nearly 120,000 employees.
The HDFC Bank provides the auto loan, credit and debit cards, personal loans, gold loans, commercial
vehicles to finance, retail business banking. HDFC is the fastest growing bank in India. Around 12.76% market cap
in India 2024.
HDFC Bank is one of the most trusted and reliable banking institutions in India, offering a wide range of
banking and financial services to its customers, including digital banking, mobile banking, net banking, debit cards,
and credit cards. The Bank has been consistently ranked as one of the top 10 banks in India in terms of assets and
deposits. It has been recognized by the RBI as the Best Bank in India and has received numerous awards and
recognitions for its customer service and product offerings.
HDFC Bank was incorporated in August 1994 and currently has a nationwide network of 4,500 branches
and 12,500 ATMs spread across Indian towns and cities. HDFC Bank‟s Corporate Governance Policy has been
adopted keeping in mind the importance of attaining fairness for all stakeholders, as well as achieving organizational
efficiency. It also offers a range of investment and insurance products, as well as various loan products, such as
home loans, personal loans, vehicle loans, and business loans.
1.3 (a) HDFC BANK’S MISSION:
”Is to be a world-class Indian bank. They have a two-fold objective: first, to be the preferred provider of
banking services for target retail and wholesale customer segments. The second objective is to achieve healthy
growth in profitability, consistent with the bank‟s risk appetite.”
“The company aims to be the premier financial partner in ensuring sustainable housing and living standards. It is
committed to providing financial solutions for sustainable living and assisting entrepreneurs in value addition.”
1.3 (b) DEPOSIT GROWTH
HDFC Bank has consistently outperformed its peers in attracting deposits, and the merger presents another
opportunity to expand its deposit base by tapping into the existing customer pool of the mortgage lender.
Remarkably, 70% of these customers currently do not hold accounts with the bank. Arvind kapil, the retail head at
HDFC Bank, recently shared his plans to encourage these customers to open savings accounts, thereby strengthening
the bank‟s relationship with them.
Additionally, the merged entity will be able to offer in house home loan products to its clients, as only 2% of them
currently possess mortgage products from HDFC Ltd., as revealed in a presentation when the merger was
announced. This expansion of product offerings is seen as a means to enhance the customer‟s relationship with the
bank, as highlighted by sashi jagdishan, the bank‟s chief executive, during the announcement of the merger.
1.3 (c) GROWRTH IN HDFC BANK:
Over the past decade, HDFC Bank has consistently delivered impressive compound annual growth rates
(CAGR) in profits, exceeding 15%, while many other large banks, except for JPMorgan Chase, have struggled to
achieve CAGRs of less than 10% in earnings per share.
1.3 (d) LOAN GROWRTH:
HDFC Bank, India's biggest financier, said its loans and deposits climbed about 5% in the September
quarter, adjusted for the merger of HDFC with it, and that its home loans expanded more than double the rate of
overall loan growth.
1.4 ACCOUNT & DEPOSITS SERVICE
Banking should be effortless. With HDFC bank, the efforts are rewarding. No matter what a customers
need and occupational status, we have a range of solutions that are second to none. whether you‟re employed in a
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 A STUDY ON FINANCIAL PERFORMANCE OF HDFC BANK IN INDIA

company and need a simple savings account or run your own business and require a robust banking parner, HDFC
Bank not only has the perfect solution for you, but also can recommend product. That can augment your planning
for the future.

It includes these services:

 Saving accounts
 Current accounts
 Fix deposits
 Durante account
 Safe deposits lockers.

1.4 (A) SAVINGS ACCOUNT

These accounts are primarily meant to inculcate a sense of saving for saving for the future, accumulating
funds over a period of time. Whatever person‟s occupation, bank have confident that person will find the perfect
banking solution. There some saving accounts like
1.4 (a1) REGULAR SAVING ACCOUNT:
An easy-to-operate savings accounts that allows you issue chaques, draw demand drafts a withdraw cash.
Check up on your balance from the comfort of your home or office through net banking, phone banking and mobile
banking. If you need money urgently then you can take, inky from the ATM machine. There are 1977 ATM centers
across the country.
1.4(a2) REGULAR SAVING ACCOUNT:
Introducing the best banking option for you with HDFC bank savings plus account. Now you can get
access to some of the finest banking facilities with HDFC bank‟s savings plus account. All you have to do is
maintain an average quarterly balance of Rs. 10,000/-.
1.4 (a3) SAVING MAX ACCOUNT:
Welcome to a world of convenience. Presenting savings max account, loaded with maximum benefits to
make your banking experience a pleasure. By maintaining an average quarterly balance of just Rs. 25,000/- you get
a host of premium services from HDFC bank absolutely free.
1.4(a4) CURRENT ACCOUNTS
HDFC Bank current account gives the power of inter-city banking with a single account and access to more
than cities. Form special cheques that get treated at par with local ones in any city where branch, faster collection of
outstation cheques (payable at branch location), free account to account funds transfer between HDFC bank
accounts to free inter-city clearing of up to 100 lakhs per month, bank‟s priority services have become the
benchmark for banking efficiency. Now, with an HDFC bank current account, experience the freedom of multi-city
banking. Person can have the power of multi-location access to his account from any of our 761 branches in 327
cities. Not only have that, he can done most of his banking transactions form the comfort of his office of home
without stepping out.
1.4 (a5) PLUS CURRENT ACCOUNT:
HDFC Bank plus current account gives the power of inter-city banking with a single account and access to
more than cities. Plus current account requires maintaining an average quarterly balance of Rs. 100,000.
1.4 (a6) TRADE CURRENT ACCOUNTS:
In today‟s changing business requirements, you need to transfer funds across cities, and time is of the
essences. HDFC bank trade current account gives power of inter-city banking with a single account.
From special cheques that get treated at per with local ones in any city where bank have a branch, to free account to
account funds transfer between HDFC bank accounts, to free inter-city clearing of up to 50 lakhs per month, bank‟s
priority services have become the benchmark for banking efficiency. Trade current account require maintaining an
average quarterly balance of Rs.40, 000
1.4 (a7) PREMIUM CURRENT ACCOUNTS:
Business needs a partner who can manage finances while concentrate growing business. Form this account
customer can avail benefits of inter-city banking account that requires an average quarterly balance of only Rs.
25,000, offers payable-At-Per cheque book facility & free inter-city clearing transaction across our network up to
Rs. 25 lacks per month.
A current account with the benefits of accessing account from a large network of branches, and through direct access
channels- the phone, mobile, internet and through the ATM.

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 A STUDY ON FINANCIAL PERFORMANCE OF HDFC BANK IN INDIA

1.4 (B) FIX DEPOSITS SERVICE

Long-term investments form the chunk of everybody‟s future plans. An alternative to simply applying for
loans. Fixes deposits allow to borrow from own funds for a limited period, thus fulfilling needs as well as keeping a
savings secure. People can invest his/her money into either in security market or gold or mutual fund of into a fix
deposits. People always go to that way where he/she can get more benefits and minimum risks. So, for this purpose
he has a better chance to deposits money in to the fix deposit.
If people always go to that way where he/she can get more benefits and minimum risks. So, for this purpose he has a
better chance to deposits money in to the fix deposit.
If people believe in long-term investments and wish to earn higher interests on his/her savings, now is the time to
invest money in HDFC Bank fixed deposit. Get up to 9.75% on HDFC bank fixed deposit with additional 0.50% for
senior citizens. What‟s more NO PENALTY if withdraw part of FD in times of need. Flexibility, security and high
returns all bundled all bundled intone offering.
1.4 (b1) REGULAR FIX DEPOSIT
As per the rules and regulation of the bank a person can deposit their money in to a fix deposit the bank and
can get the benefits of these facilities.
1.4 (b2) FIVE YEAR TAX SAVING FIX DEPOSIT
In 2006 it was announced for first time that bank fixed deposits booked by an individual/HUF for 5 year&
up to Rs. 1,00,000/- will be allowed exemption under sec 80c of the income tax act,1961 subject to necessary
declaration taken from the customer.
1.4 (b3) DEMAD ACCOUNT SERVICE
Nowadays share market is becoming is the main occupation of the person. So to avoid faulty processes
demat account is really most impotent for the share market and for the safety of shares it is most important HDFC
BANK is one of the depository participant (DP) in the country with over 8 lac demat accounts.
HDFC bank demat services offers a secure and convenient way keep track of securities and investment, over a
period of time, without the hassle of handing physical document that get mutilated or lost in transit.
HDFC BANK is depository participant both with-national securities depositories limited (NSDL) and central
depository services limited (CDSL).
1.4 (b4) SAFE DEPOSIT LOCKER
A safe deposit locker with HDFC bank is the solution to person‟s fear. Located at select branches in critics
all over the country, bank‟s lockers ensure the safe keeping of valuable.
Eligibility
An individual (not minor), firms, limited company, associations, clubs, trusts, societies, etc. may hire a locker.
Advantages of safe deposit locker in HDFC bank
Wide availability
Lockers available in various sizes. i.e. small, medium, large and extra-large with varying rents.Lockers are
rented out for a minimum period of one year. Rent is payable in advance. No deposits are required to avail a locker.
Just open an account and get the locker facility.
There is a nominal annual charge, which depends on the size of the locker and the center in which the branch is
located.
Nomination for Safe Deposit Locker
The Lockers and their contents can be nominated to people near and dear to you. Nomination facility is
available to individual hirer of Safe Deposit Locker.
In the case of a sole hirer of a safe deposit locker, nomination can be made in favor of only one individual
Where the safe deposit locker is hired in the name of a minor, the nomination shall be made by a person lawfully
entitled to act on behalf of the minor.
Terms & Conditions
 For obtaining a Locker at HDFC Bank you must be an account holder with Bank. Lockers can be allotted
individually as well as jointly.
 The Locker holder is permitted to add or delete names from the list of persons who can operate the Locker and
can have access to it.
 Loss of Key is to be immediately informed to the concerned Branch.

1.4 (c) LOAN SERVICES

In today's competitive world everything happens only with the help of money or through the money every
person need money. But some time a person has not cash on hand at that time he needs lone either from any friend
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 A STUDY ON FINANCIAL PERFORMANCE OF HDFC BANK IN INDIA

or from any financial institute. Lone does not mean that only lower class person needs it but also upper class person
it is needed.
As per the requirement of the every person there are much type of loans are there in the HDFC bank.
1.4 (c1) PERSONAL LOAN:
A person has so many dreams but some time due to scarcity of money a dream can't be satisfy. So, here one
solution for that person this is personal loan. From this he/she can fulfill their needs or requirement. It can be any
thing either a dream of vacation or son/daughter's admission to college or any wedding, so personal loan can be
helpful in this entire requirement.
As person ordered in the hotel for tea or coffee and it is immediately came fast, same over here any person want to
get a personal loan with the nominal documents he can get the loan.
1.4 (c2) HOME LOAN:
HDFC Bank brings HDFC Horne loans to doorstep. With over 30 years of experience, a dedicated team of
experts and a complete package to meet all housing finance needs, HDFC Home Loans, help people realize dream.
1.4(c3) GOLD LOAN:
With HDFC Bank's Gold Loan, person can get an instant loan against gold jewellery and ornaments. The
procedure is simple, documentation is minimal and approval is quick. A person can get 70% loan on the value of the
gold jewellery and ornaments. There is also availability of the overdraft on the gold jewellery. With this a customer
can get free additional services like free personalized cheque book, free international debit card, and free net
banking phone banking services.
1.4 (c4) EDUCATIONAL LOAN
Nowadays important of education becoming very high. ASs it important becoming high it is becoming
costly. So in the higher education some time people cannot effort a high price at a same time. So, there is education
loan is also available for the student.A person can get loan up to 10 lakhs to study in India and 20 lakhs if he wants
to study in abroad. Loan available up to tenure of 7 years including moratorium period. Loans disbursed directly to
the educational institution. It is released as per fee schedules of institutes. Exclusive Telegraphic Transfer facility
available for courses abroad. Loans available for short duration/job oriented courses also.
1.4(d) CARD SERVICES
In today's competitive and fast time card services providing by the banks are really very important to every
person and every business needs or to take meal in to the hotel or to purchase jewellery from the jewellery shops
cards are playing good role in the banking sectors.
Bank ranges of Cards help to meet financial objectives. So whether persons are looking to add to his buying power,
conducting cashless shopping, or budgeting his expenditure, he will find a card that suits him.
1.4 (d1) CREDIT CARDS
A person wants many things like, a trip to Bali, a diamond ring for wife's dreams. Some dreams can't wait.
If there's something person has always wanted. If a person wanted fulfilthis was he can get benefits from the HDFC
bank's credit cards facilities.
DIFFSERENT TYPES OF CREDIT
CLASSIC CARDS
 Silver Credit Card.
 Value plus Credit Card.
 Health plus Credit Card.
PREMIUM CARDS:
 Gold Credit Card
 Titanium Credit Card
 Woman's Gold Card
 Platinum Plus Credit Card
4.1 (d2) DEBIT CARD
HDFC Bank Debit Cards give person complete and instant access to the money in his accounts without the risk or
hassle of carrying cash.
TYPES OF DEBIT CARD: -
 Classic card
 Easy shop international Debit card.
 Premium card
 Easy shop gold Debit card.

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 A STUDY ON FINANCIAL PERFORMANCE OF HDFC BANK IN INDIA

 Specialized card
 Easy Shop International Business Debit Card.
 Easy Shop Woman's Advantage Debit Card
 Easy Shop NRO Debit Card.
 Kisan Card.

1.4 (d3) PREPAID CARD

Besides offering convenience, Prepaid Cards have been tailored to answer travel and gifting needs. ForexPlus Cards
 Prepaid Travel Card.
 Gift Plus Cards
 Prepaid Gift Card.
 Food Plus Cards
 Prepaid Food Plus card.
 Money Plus Card
 The Corporate Payment card
BRANCHES OF HDFC BANK IN INDIA
HDFC Bank is headquartered in Mumbai. As of September 30, 2023, the Bank's distribution network was at 7,945
branches across 3,836 cities. Customers across India are serviced through multiple delivery channels such as Phone
TABLE 1.1
STATE WISE BRANCHES OF HDFC BANK IN INDIA
NAME OF THE STATE NUMBER OF BRANCHES

ANDAMAN&NICOBAR ISLAND 7

ANDHRA PRADESH 526

ARUNACHAL PRADESH 9
ASSAM 122
BIHAR 164
CHANDIGARH 10
CHHTTISGARH 210
DADRA AND NAGAR HAVELI 5
DAMAN AND DIU 8
DELHI 302
GOA 122
GUJARAT 723
HARYANA 471
HIMACHAL PRADESH 106
JAMMU AND KASHMIR 116
JHARHAND 80
KARNATAKA 508
KERALA 353
LAKSHAWEEP 1
MADHYA PRADESH 381
MHARASHTRA 1413
MANIPUR 13
MEGALAYA 24
MIZORAM 12
NAGALAND 7
ODISHA 225
PADUCHERRY 4
PUNJAB 584
RAJASTHAN 512
SIKKIM 13
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 A STUDY ON FINANCIAL PERFORMANCE OF HDFC BANK IN INDIA

TAMIL NADU 560

TELANGANA 279
TRIPURA 19
UTTAR PTADESH 837
UTTARAKHAND 103
WEST BENGAL 357

Source:Annual Report HDFC BANK

1.5 STATEMENT OF THE PROBLEM

The country‟s largest private sector lender HDFC bank some of
customers are facing intermittent issues while accessing net banking and mobile banking facilities. Customers facing
outstares took to social media to vent out their frustration. HDFC bank said some customers are facing intermittent
issues accessing our net banking/mobile banking app. We are looking in to it on priority for resolution.
1.6 OBJECTIVES OF STUDY:
1. To analyze the liquidity and solvency position of the bank
2. To identify the financial strength and weakness of the HDFC Bank
1.7 SCOPE OF THE STUDY
HDFC Bank is the most profitable among all domestic scheduled commercial banks. HDFC Bank motto is we
understand year world. HDFC bank enables seamless delivery of home loans as a part of its wide product suite
catering to urban, semi-urban and rural India. HDFC Bank is important players in financial market and offer
financial services such as investment funds.
2 .1REVIEW OF LITERATURE
Sureshchandar. G.S. Chandra Sekharan Rajendran, and R.N. Anantharaman (2022) in their article,
critically examined the service quality issued from the customer's point of view. Their study was conducted in a
developing country, like India. The authors selected three groups of banks for their study viz. Public sector, Private
sector and foreign banks. Authors in their study found that in terms of the customers' perceptions of service quality,
the technological factors appeared to contribute more in differentiating the three sectors and the people oriented
factors appear to contribute less in differentiation among these three sectors. In terms of performance, foreign banks
topped among the three groups, and performance of public sector banks was even less than private sector banks.
Wong and Sohal (2022) in their article evidenced that perceived service quality had an impact on customer loyalty.
In a study conducted in retail trade, a positive relationship was found between service quality and customer loyalty.
ANALYSIS OF INTERPRETION:
3.1 RESEARCH METHODS:
Research method is a broad term. While methods of data collection core data analysis represents be core of
research methods.
3.2 SECONDARY DATA:
Secondary data is the data, which is collected from published source. The secondary data various sources such
as bank‟s annual report to previous years different document prepared by the bank and from various reference book
also.
It is refers to a type of data that has been previously published in journals, magazines, online and other
sources.
3.3 DATA ANALYSIS:
This chapter deals with data analysis and interpretation. The outcome of the present study yield significant
findings of HDFC bank. Some of the major ratio has been evaluated and interpreted for the purpose of
understanding the financial performance of the bank.
3.4 RATIO ANALYSIS:
Ratio analysis is obtained by dividing the first number of the ratio with the second number of the ratio. It is
expressed as a single decimal number or sometime multiplied by 100 and expressed as a percentage.
OBJECTIVE-1
3.5 TO ANALYZE THE LIQUIDITY AND SOLVENCY POSITION OF THE BANK
SHORT-TERM SOLVENCY RATIOS
CURRENT RATIO:

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 A STUDY ON FINANCIAL PERFORMANCE OF HDFC BANK IN INDIA

The current ratio is a liquidity ratio that measures a company‟s ability to pay short-term obligations or those due
within one year. It tells investors and analysts how a company can maximize the current assets on its balance sheet
to satisfy its current debt and other payables.
A current ratio that is in line with the industry average or slightly higher is generally considered acceptable. A
current ratio that is lower than the industry average may indicate a higher risk of distress or default. Similarly, if a
company has a very high current ratio compared with its peer group, it indicates that management may not be using
its assets efficiently.
The current ratio is called current because, unlike some other liquidity ratios, it incorporates all current assets and
current liabilities. The current ratio is sometimes called the working capital ratio.
Current Ratio = current assets/ current liabilities.
current ratio of less than 1.00 does not have the capital on hand to meet its short-term obligations if they were all due
at once, while a current ratio greater than 1.00 indicates that the company has the financial resources to remain
solvent in the short term.

TABLE 3.1 : CURRENT RATIO

FINANCIAL MARCH MARCH MARCH MARCH MARCH
YEAR 2019 2020 2021 2022 2023
CR 0.05 0.04 0.03 0.05 0.07
Source: annual report in HDFC bank.
Table 3.1 shows that the current ratio was 0.05 in the year financial year(FY) 2019 it was decreased to 0.04 and 0.03
in the year 2020 and 2021. In the year 2022 the ratio was increased 0.05 in previous year and 2023 fiancial year
current ratio 0.07 is higher than previous year.
ANALYSIS OF INTERPRETION:
3.1 RESEARCH METHODS:
Research method is a broad term. While methods of data collection core data analysis represents be core of
research methods.
3.2 SECONDARY DATA:
Secondary data is the data, which is collected from published source. The secondary data various sources such
as bank‟s annual report to previous years different document prepared by the bank and from various reference book
also.
It is refers to a type of data that has been previously published in journals, magazines, online and other
sources.
3.3 DATA ANALYSIS:
This chapter deals with data analysis and interpretation. The outcome of the present study yield significant
findings of HDFC bank. Some of the major ratio has been evaluated and interpreted for the purpose of
understanding the financial performance of the bank.
3.4 RATIO ANALYSIS:
Ratio analysis is obtained by dividing the first number of the ratio with the second number of the ratio. It is
expressed as a single decimal number or sometime multiplied by 100 and expressed as a percentage.

OBJECTIVE-1
3.5 TO ANALYZE THE LIQUIDITY AND SOLVENCY POSITION OF THE BANK
SHORT-TERM SOLVENCY RATIOS
CURRENT RATIO:
The current ratio is a liquidity ratio that measures a company‟s ability to pay short-term obligations or those
due within one year. It tells investors and analysts how a company can maximize the current assets on its balance
sheet to satisfy its current debt and other payables.
A current ratio that is in line with the industry average or slightly higher is generally considered acceptable. A
current ratio that is lower than the industry average may indicate a higher risk of distress or default. Similarly, if a
company has a very high current ratio compared with its peer group, it indicates that management may not be using
its assets efficiently.
The current ratio is called current because, unlike some other liquidity ratios, it incorporates all current assets and
current liabilities. The current ratio is sometimes called the working capital ratio.
Current Ratio = current assets/ current liabilities.

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current ratio of less than 1.00 does not have the capital on hand to meet its short-term obligations if they were all due
at once, while a current ratio greater than 1.00 indicates that the company has the financial resources to remain
solvent in the short term.

TABLE 3.1 : CURRENT RATIO

FINANCIAL MARCH MARCH MARCH MARCH MARCH
YEAR 2019 2020 2021 2022 2023
CR 0.05 0.04 0.03 0.05 0.07
Source: annual report in HDFC bank.
Table 3.1 shows that the current ratio was 0.05 in the year financial year(FY) 2019 it was decreased to 0.04
and 0.03 in the year 2020 and 2021. In the year 2022 the ratio was increased 0.05 in previous year and 2023 fiancial
year current ratio 0.07 is higher than previous year.
QUICK RATIO:
The Quick Ratio, also known as the Acid-test or Liquidity ratio, measures the ability of a business to pay its
short-term liabilities by having assets that are readily convertible into cash. These assets are, namely, cash,
marketable securities, and accounts receivable. These assets are known as “quick” assets since they can quickly be
converted into cash.
Quick Ratio = [Current Assets – Inventory – Prepaid expenses] / Current Liabilities
A quick ratio of less than 1 or 1:1 isn‟t always a death sentence for a company. It simply means the
company does not have enough liquid assets to pay off short-term debts. A company may have excellent terms with
its lenders, so those short-term debt payments may be smaller than they seem on the balance sheet. Additionally, for
a company like Apple, inventory may be liquid enough to fill in the gaps left by other current assets. Companies can
also seek further financing to meet short-term obligations.
Table 3.2 : QUICK RATIO
Financial 2019 2020 2021 2022 2023
Year
Quick 16.61 16.62 17.58 18.77 19.48
Ratio
Source: annual report in HDFC bank.
Table 3.2 explains ability of bank to meet its financial obligation it gives better position of the bank. Quick ratio in
the year 2019 is 16.61 which had increased by 16.62 and 17.58 in the year 2020 and 2021 receptively and also 2022
and 2023 increased 18.77 and 19.48 during period the bank liquidity position is good.
LONG-TERM SOLVENCY RATIOS
FIXED ASSET RATIO:
This ratio deals the relationship between fixed assets and long-term funds. The primary motto of this ratio
is to ascertain the proportion of long-term funds invested in fixed assets.
Fixed assets ratio = fixed assets / long-term fund
An ideal fixed assets ratio is 0.67 the ratio must not be more than 1, if the ratio is less than 1 it indicates a that a
portion of working capital had financed by long-term funds.

Table 3.3: fixed assets ratio

Financial 2019 2020 2021 2022 2023
Year
FAR 0.09 0.09 0.08 0.07 0.07

Source: annual report in HDFC bank.

Table 3.3 fixed assets and long – term funds of the bank. In the year 2019 fixed asset ratio is 0.09 and 2020
fixed asset ratio 0.09 both are year ratio are same and 2021 and 2022 is fixed asset ratio is 0.08 and 0.07 decreased
for previous years. Hence a portion of working capital had financed by long-term funds during the study period.
DEBT TO EQUITY RATIO:
Used in corporate and personal finance, the debt-to-equity (D/E) ratio is a metric that evaluates your
company's financial leverage. In other words, it lets you determine how much a company finances its operations via
debt as opposed to owned funds. It's referred to as the personal debt-to-equity ratio when used with personal
financial statements.

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The debt-to-equity ratio helps you determine if there's enough shareholder equity to pay off debts if your company
were to face a decrease in profits. Investors tend to modify the ratio to center on long-term debt since risks vary
when you look beyond the short-term, or they use other formulas to determine a company's short-term leverage.
Keep in mind that the debt-to-equity ratio calculation risks changes incurred from earnings, losses and other
adjustments. A company's debt-to-equity ratio also varies across industries, as amounts of debt change by sector.
Debt-to-equity ratio = Total liabilities / Total shareholders' equity
A debt-to-equity ratio below 1.0 is considered healthy, but it depends on he industry. However, aiming for one
below 2.0 is ideal.
TABLE 3.4 :DEBT TO EQUITY RATIO
Financial 2019 2020 2021 2022 2023
year
Debt to 6.97 7.56 7.22 7.26 7.46
Equity ratio
Source: annual report in HDFC bank.
Table 3.4 explains debt-to-equity ratio relationship. In the year 2019 the ratio was 6.97 and it was same in the
year 2020 followed by this it was increased by 7.56 during the year 2021 and 2022 was 7.22 and 7.26 are decreased.
2023 is butter than 7.46 for 20 PROPROETARY RATIO:
This ratio is called as owner fund ratio or net worth ratio. This ratio points out relationship between the stake
holder‟s funds total tangible assets.
Proprietary ratio = shareholders’ funds / total tangible assets
This ratio is very useful to determine the long- term solvency of the company. It is important to the creditors who
can ascertain the proportion of shareholders funs in the total assets employed in the company. Standard norm of this
ratio 0.5 below this standard norm the creditors may have to loss heavily in the event of winding company.

TABLE 3.5: PROPROETARY RATIO

Financial year 2019 2020 2021 2022 2023
Proprietary 1.17 1.02 0.94 1.15 1.42
Ratio
Source: annual report in HDFC bank.
Table 3.5 clearly explains that long-term solvency of the company. In the year 2019 the ratio was 1.17 which has
decreased by 1.02in the year 2020. But it was decreased to 0.94 during the year 2021. Followed by this year 2022
and 2023 it was increased to 1.15 and 1.42 respectively. These ratios are more than the standard norm of 0.5. it is
clearly shows that the creditors are highly safe during the study period.
21 and 2022.
OBJECTIVE – 2
3.5 TO IDENTIFY THE FINANCIAL STRENTH AND WEAKNESS OF THE HDFC BANK
3.5(A) HDFC Strengths
a.1. Comprehensive network of branches
HDFC Bank stands out as India‟s second-largest financial institution in private banking. The bank has up to 6,342
branches and 18,130 ATMs. That empowers the bank to reach a wider population, which in turn has a positive
impact on its annual revenue.
a.2. Significant player in the banking sector
HDFC Bank ranks as the number one private sector bank by assets in India and the 16th largest bank by market
capitalization. HDFC trades on the Indian stock exchanges at a market capitalization of 9.04 trillion Rupees.
a.3. Strong presence in retail banking
The bank performs exceptionally well in retail banking. It provides customized services to individual consumers
who get better ways of managing their money, accessing credit, and securely depositing money.Some of the services
available in the retail banking segment include credit cards, personal loans, mortgages, certificates of deposit, and
savings accounts.
a.4. SME finance services
HDFC Bank provides financial solutions to small and medium businesses all over India. The SME services available
include credit cards, working capital, trade services, cards, loans, accounts, and payments and collections.

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a.5. High customer satisfaction rating

The bank has enjoyed significantly higher customer ratings compared to other private banks. Generally, the bank has
positive reviews for good services and outstanding customer support and does well for both current and savings
accounts. HDFC‟s net promoter score, a customer satisfaction metric, has improved by 22% from last year.
a.6. Has awards that create customer confidence
HDFC Bank has received several awards and recognition that work in its favor regarding getting customer
confidence. For instance, the bank has been awarded the „Best Bank‟ title from key financial rating institutions like
Financial Express, Finance Asia Country Awards, Euro money Awards for Excellence, and Dun and Bradstreet.
a.7. High employee retention rate
HDFC Bank has a large employee database due to the company‟s size. Despite that, the bank enjoys a high
employee retention rate. That means they save time on recruitment processes but instead can plan on company
growth. The ability to keep employees for a long time also sends a strong message to customers as they note that the
bank has significant stability.
a.8. Merger with parent HDFC approved
The merger between HDFC Bank and the parent company HDFC Ltd. has been approved. That gives the bank a
solid platform for seamlessly delivering home loans and leveraging on a larger customer base. Furthermore, the two
can now liaise to enhance the speed of credit growth.
a.9. Leverages technology
HDFC Bank has invested significantly in technology, improving the service quality. Customers no longer need to
make long queues at the bank because they can complete most transactions from the comfort of their homes via
mobile banking and online banking.
HDFC Bank provides a Net Banking platform on which customers register online with the help of OTP sent on a
mobile number for added security level.
a.10. Leadership in payments technologies
HDFC Bank is an important player in the payments business, with a leading market share in issuing, acceptance, and
consumer finance. The company has grown drastically in recent years in the payment business, distributing more
than 63 million payment cards. Every third rupee spent on cards in India is via HDFC Bank cards.
3.5(B) HDFC Weaknesses
b.1. Lack of strong rural presence
HDFC Bank has yet to create a strong presence in the rural area, contrary to what its main competitor ICICI has
been doing. This lack of rural dominance means the company loses important businesses that would have further
bolstered its revenue.
Currently, the bank has 1,147 branches in rural areas, compared with 1,312 in urban areas and 1,843 in
metropolitans.
b.2. Underperforms in some sectors
Even though the bank has made efforts to penetrate various segments, that does not mean it is doing well in all. The
bank‟s shares on stock exchanges are underperforming, reporting lower than expected earnings in the quarter ending
March 2022.
The disappointment in earnings and subsequent target price cuts have led to the stock underperforming its
competitors consecutively for several months.
b.3. Restrained marketing approach
HDFC Bank does not advertise as aggressively as ICICI. The lack of effective marketing strategies has not anchored
well with the bank‟s intention to expand its market growth. Additionally, it has made most customers label it as a
bank of high-end clients.
b.4. Investors’ uncertainty
Investors have remained uncertain about their investment in HDFC Bank for a while because the bank‟s share prices
keep fluctuating.
b.5. Stiff competition from public and private banks
HDFC Bank has to put up with spirited competition from other banks with more aggressive marketing strategies.
b.6. Weak international presence
HDFC mainly operates its businesses in India, with overseas branches in Hong Kong, Kenya, and Abu Dhabi. Only
0.55% of total revenue is contributed by overseas branches. The dependency on its domestic business makes the
bank vulnerable to the economic situation in India.
3.5(C) HDFC Opportunities
c.1. Leverage growing corporate banking
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HDFC Bank can expand its business by taking advantage of the growing corporate banking sector. According to
India Ratings & Research, banking credit is expected to have double-digit growth in the next few years
Small, medium, and large businesses are expanding at a rapid rate. The bank can use its positive reputation in
corporate banking to attract these customers.
c.2. Venture into foreign markets
HDFC Bank can start looking beyond its borders. It is something that they can do easily, considering the bank‟s
strong financial backing.
c.3. Debt settlement process
HDFC Bank has gradually improved its bad debt portfolio compared to most government banks. Putting in place
efficient debt settlement processes can further work to its advantage.
c.4. Asset availability for growth
HDFC Bank has the required resources for it to grow. Its good asset quality puts it above government banks in terms
of growth potential.
c.5. Digital opportunities
HDFC has been actively integrating technology into its operations. The company has engaged in digital
transformation, which is under three pillars named Digital Factory, Enterprise Factory, and Enterprise IT. The bank
is future-ready to harvest any new opportunities related to digital banking.
3.5(D) HDFC Threats
d.1. New-age banking
We are in an era of banking where things have changed from how they used to be done traditionally. Aspects like
online crypto currency and online stock trading present significant threats to HDFC Bank if it does not adapt to the
new environment.
d.2. Restricted growth
HDFC Bank has had a rough time trying to increase its market share due to the spirited marketing that ICICI has
conducted.
d.3. Increasing competition
Government banks have started becoming more flexible, which makes them more competitive with private banks
like HDFC Bank.
d.4. Data securities
As more and more client data and software systems are stored in the cloud, cybercriminals could utilize this
vulnerability to organize cyber-attacks. Cyber security has become an important issue in banking. HDFC will need
to ensure the safety of its IT infrastructures to avoid harmful breaches.

CONCLUSION:
HDFC Bank is a largest private sector bank in India. The research was on financial performance of HDFC
Bank for five years from 2019 to 2023 the date has been collected from reports of the bank and the website the data
was analyzed through ratio analysis. The research health of HDFC Bank. For is table and ratio analysis were used to
analyze and interpret the information obtained HDFC Bank deals with three key business segment.
 Retail banking services
 Wholesale banking services
 Treasury operation
Retail banking business caters to salaries and professional borrowing, individual borrowing, micro and small
businesses, extremely small businesses like self-help group (SHGS), non-resident Indian (NRIs)
The study mainly concentrates on the analysis of financial performance and soundness of bank. It helps to
understand the working of the bank. Form the study financial performance of HDFC Bank it can be concluded that
the bank satisfactory position with regard to profitability and the bank needs to improve its liquidity and solvency. If
the bank continues to work with more efficiency, it can have greater success in the nearfutre.

REFERENCES:
1. Www. Wikipedia.com
2. www.hdfcbank.com
3. www.goole.co.in
4. https://www.codeforbanks.com/banks/hdfc-bank/state-wise-branches/
5. Annual report in hdfc bank
6. https://www.theforage.com/blog/skills/quick-ratio
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7. https://www.fe.training/free-resources/accounting/fixed-asset-ratios/
8. https://groww.in/p/debt-to-equity-ratio
9. https://www.geeksforgeeks.org/proprietary-ratio-meaning-formula-significance-and-examples/
https://bstrategyhub.com/hdfc-bank-swot-analysis/

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