According to the market capital of India’s stock market, we will try to study the success of HDFC Bank, the third largest company, through this article. In India, we have seen a network of cooperative banks that ruled the financial sector of India for the last several decades, the same state-owned banks that we have seen after 1970. After the policy of liberalization of private sector banking companies after 1991, we got to see in India, in which HDFC Bank gets to see us at the top.
In Government banks, we get to see very good facilities, but we have to see very bad experience in matters of service, which was taken advantage of by private sector banks after 1990. Digital Banking This and a revolution we have seen in the banking sector, which we should connect with the stock market. From mobile banking to ATM centers, all the facilities are like a dream for those who have seen the services of the banking sector in the 1990s. One had to wait four to five days for a check to be cleared and up to 10 days if a problem was created.
Today we see these facilities happening immediately through digital banking, in which HDFC Bank has been very important and many of these facilities were introduced in India for the first time. Therefore, through this article, we will see the case study of HDFC Bank, from the history of the company to the success of the company. What were the features in it, due to which HDFC Bank has achieved its position at the top by keeping the rest of the banks behind, it will be seen.
HDFC Bank Company Profile –
- Company Name – HDFC Bank Limited
- Parent Company – Housing Development Finance Corporation Limited
- Company Establishment – August 1994
- CEO – Shashidhar Jagadeesan
- IPO – March 1995 (5 Crore Equity Shares @ 10 Rs.)
- Market Capital – Rs 7.72 Lakh Crore (July 2022)
- Industry – Financial Services
- Main Office – Mumbai – Maharashtra
- Employee – 120093 (2021)
- Branches – 6342 (March 2022)
- ATM – 13130 (in 3188 cities)
- Net worth – 21. 22 lakh crore rupees (280 billion US dollars)
- Subsidiary Company – HDFC Securities , HDB Financial Services
History of HDFC Bank –
Prior to 1990, financial transactions were done through government banks in India, which in 1991 started licensing private banks in the banking sector under the policy of liberalization. HDFC This company was earlier working in the field of housing loan which filed application for banking license and under this HDFC Bank was established in 1994 and license was given in 1995. Housing Development Finance Corporation This company is established by Hasmukh Parekh and it is further handled by Deepak Parekh who is his nephew.
When Deepak Parekh decided to set up HDFC Bank, he formed a team that took Citibank chief Aditya Puri as the Managing Director of HDFC Bank. Who made the bank the biggest bank in India and made it a successful private bank. HDFC Bank’s IPO was brought in 1995 which was successfully listed in the stock market with an increase of 55 times. HDFC Bank has given 28.86% return every year since its listing which is the reason for the success of the company and shows the trust of the people in the bank.
Leaving behind HDFC Bank’s main competitor, ICICI Bank, the company brought every change to the customers with improvements after ICICI Bank. Despite the good facilities of government banks, there was a lack of good services, which HDFC Bank removed this flaw by giving good services to the customers and attracted the customers. For the first time in India, ATM banking was introduced by HDFC Bank to the people through a private bank for the first time and brought mobile banking and messaging to the customers.
Business Model of HDFC Bank –
ICICI Bank It has been a major competitor in the Indian banking sector since inception, which makes any changes in the banking sector first, in which HDFC Bank finds flaws and markets them in a better way. The bank has always given priority to the customers of the retail sector while the rest of the private banks have given priority to the corporate sector. Even though the banks get more profit through the customers of the corporate sector, but the risk is also high. The same retail sector was not restricted by the banks only to the savings account or current account, but with which it has increased its profits by selling products like credit card service, motor vehicle loan and life insurance.
In the corporate sector, the company has always given importance to the policies of the company by keeping the relationship separate, due to which the NPA rate of the company has always been lower than the rest of the banks. Instead of opening only current accounts of corporate banks, for the first time, employees started paying salaries through banks, which has seen a significant increase in the number of customers. HDFC Bank is credited with bringing the world’s best technology to the banking sector in India, in which all transactions are done through the central bank. Due to the dealing with the Central Bank, people started giving priority to HDFC Banks over the banks serving only customers in a specific branch.
After 1990, the stock market started running in a digital way, but banking accounts were still not made digital, in which the bank took the initiative and tried to attract the share broker from the stock market under good plans, due to which many stockbrokers from the bank The company is connected. HDFC LTD This is the major producer company of HDFC Bank which looks after the housing finance which is done by HDFC Bank and finally all these accounts are transferred to HDFC this parent company. HDFC Bank has become India’s number one banking company today because of doing something different instead of being part of such a crowd.
HDFC Bank & Share Market –
HDFC Bank listed its IPO in the Indian market for the first time in 1995 which was oversubscribed 55 times and today this stock is giving more than 28% return to every investor from the previous. The share price of HDFC Bank is running at a higher price than its original price, yet the fundamentals of the company are very strong. HDFC Bank in India is still more visible to the cities, still the bank still gets a lot of space to reach the village. ICICI Bank It is a major competitor of HDFC Bank, in which due to a lot of controversial incidents from the last few days, people have increased more confidence to invest in HDFC Bank.
HDFC Bank’s NPA is the least seen in the Indian banking market, in which the company’s policies have been of great importance, so the profit that the company earns every year, the company has not only through loans but also through different services given to customers. And increase your income through investments like mutual funds. HDFC Bank has more than 25% market share in the Indian market, which is achieved through corporate account through the company’s salary account banks, other services are provided by creating an ecosystem.
According to the market capital HDFC, this bank is seen as the third largest company in the Indian stock market, which is not only the largest bank but also the largest company. These promoters are 26% of the shareholders of HDFC Bank, 37% of FII mutual funds, 13.5% are seen as major investors. The future of private banks is looking very good in future, seeing the financial condition of public sector banks and the stature of NPAs, some limitations of co-operative banks. Therefore, investing in the banking sector can be beneficial in the future, even in that HDFC Bank is the top bank in this sector.
Success Formula of HDFC Bank –
After 1990, through liberalization in India, a lot of changes were also seen in the banking sector, before this the schemes were very good for the government banks but the services for the customers were very bad. HDFC Bank made good services available to the customers in the Indian banking sector and used the world’s best technology in the banking sector and started providing fast services through mobile messages. Taking loans to government banks for ordinary customers was a very complicated process which also took a lot of time, which was simplified by HDFC Bank to pay attention to the needs of the customers.
Instead of focusing more on the corporate sector, he expanded the business in the retail sector and then linked the corporate sector with banking services. Whatever technology ICICI Bank used to bring in the banking sector, it started bringing in the improved technology market by modifying it properly, due to which despite being the last mover, it has been successful in attracting customers in the banking sector. The payment transfer used to take more than five days earlier due to which companies had to keep more money in reserve and it was difficult to do business. To whom HDFC Bank started giving this payment on payment against deposit which was very effective which was instantaneous. Started.
It is risky to give loans in the corporate sector, even though banks get more profit on it, but HDFC Bank, keeping control over it, paid more attention to giving other facilities to the corporate sector, for which what are the financial problems of the corporate sector. With this, companies started providing facilities like payment problems of employees, loans for small tasks, due to which a large amount of retail business was attracted towards the bank. Investing in the stock market, insurance schemes, maximum use of technology in the banking sector and other banking services paid more attention to increase income.
HDFC Bank & Banking Sector –
HDFC Bank has grown very rapidly in the banking sector over the last 30 years and the credit for this should be given to the management of the company whose policy has propelled the company to the top. HDFC LTD It is the producer company of HDFC Bank which has created HDFC Bank but today HDFC Bank has grown much bigger than its parent company. If both HDFC companies are combined, then it can become the second largest company in India, which will be the largest company in terms of market capital. In the Indian banking sector, public sector banks have suffered a lot since the last few days due to NPAs and due to corruption.
Despite the loss of government banks, people still have faith in private banks on government banks, the main reason for this is cheap facilities and good plans, even though government banks impose this delay in terms of service, but ordinary customers of India, it is a matter of purchasing power. I’m still pretty weak. The facilities of HDFC and ICICI banks are good but they are expensive which is very difficult to reach to ordinary customers. This is also the main reason why HDFC Bank has not yet reached the rural areas of India.
Today’s major retail customer of HDFC Bank comes from urban areas and they are customers working in good companies who can afford to pay charges to get good facilities. Therefore, until the purchasing power of people in India does not increase and more and more people are not able to use bank accounts in private banks, HDFC Bank has a lot of scope to grow. The limits of cooperative banks are limited to their states and also work under political influence, due to which it has to suffer in economic matters.
Features of HDFC Bank –
- In 1994, Housing Development Finance Corporation applied for setting up of a bank with the Reserve Bank of India by the private finance company lending these houses.
- In January 1995, HDFC Bank Limited was granted a banking license by the Reserve Bank.
- In March 1995, HDFC Bank’s IPO was listed on the Indian stock market which was 55 times subscribed.
- Deepak Parekh It was the head of HDFC Ltd who dreamed of setting up HDFC Bank and persuaded Citibank CEO Aditya Puri to run the company.
- HDFC Bank has given 28.86 % returns to its investors every year since the inception of the company, which in itself is an achievement of the company’s success.
- ICICI Bank It is HDFC Bank’s major competitor in the banking sector, which has a strong network.
- By March 2022, the company’s network of 6342 branches is established in 3188 cities across India, in which the Mumbai branch was the first branch to be established.
- ATM services, phone banking, SMS services, digital banking and credit card and loan services are the major achievements of HDFC Bank.
- Central Banking System This effective banking system was first brought to India by HDFC Bank.
- Savings Account Current Account and Loan These facilities are the main means of generation of the bank, along with credit card, insurance, mutual fund investment, these other means the bank earns its income.
- The net worth of HDFC Bank is Rs 21.22 crore, which in itself is the strongest company in the Indian stock market in terms of fundamentals.
- HDFC Bank was listed on the New York Stock Exchange on 20 July 2001.
- HDFC Bank This is the first private bank in India through which income tax is collected and today it is the second number bank which collects the highest income tax.
Critical Analysis of HDFC Bank –
Banking accounts of people were opened through Bharat Jan Dhan Yojana, under which subsidy has to be deposited, so that people can be connected through banking transactions in India. Through liberalization, privatization of banks is started in India, through which government banks will be merged first and then privatized. The main objective of the Government of India behind this is to create transparency in all the transactions of the country and make India’s economy digital. The biggest problem in this is the purchasing power of the people and secondly the literacy which is mainly seen in digital practices is low.
To open a simple savings account in private banks like HDFC and ICICI, a deposit of Rs 5000 to 10000 is required for which 80% of the population of India is not capable. Even the average balance of 500 rupees in government banks is not maintained by the people, this ground reality will have to be understood by the private banks. We have to create a mindset to take the benefits of India’s economy to the lower strata of the society. HDFC Bank is mostly seen in urban areas, the main reason for this is what we have told.
Government of India policy is very important for the growth of HDFC Bank and the bank will have to work as a responsibility towards the development of the country, not keeping this objective only profit making. When we have to compete with foreign banks, we have to see whether we are making them powerful or not. In the case of amendment, HDFC Bank has been copying the foreign business model and executing it in India, it will have to be improved and done by keeping the best and the people of India in front. If HDFC Bank does this, then the chances of getting more 80% of the business company from the villages of India increases.
In this way we have seen how the growth of HDFC Bank has been in the last 30 years. ICICI Bank It is considered to be the oldest private sector bank in India, but there have been many important reasons why HDFC Bank was successful in beating it. In which this has been made possible by the best leadership and management policy, and the structure of the company which the company has made in view of India’s banking sector with considerable modification. When Deepak Parekh decided to prepare a team for HDFC Bank, he could only give this work to his old team, but he decided to make a complete team to do this work.
When this proposal was first made to Citibank CEO Aditya Puri, he rejected it, but Deepak Parekh, after explaining to him, gathered the best skills of Citibank and the world and started HDFC Bank. Micro Banker Software in Technology This is the important software of HDFC Bank through which the bank has achieved its success. The company has maintained a very important team in the matter of cyber security in technology, and recently the Indian government has tried to strengthen the banking sector by tightening some rules of cyber security law.
Hasmukh Parekh It was Deepak Parekh’s uncle who played a vital role in the success of ICICI Bank and his experience and contribution in the establishment of HDFC Bank has been significant. Deepak Parekh himself being a highly educated Chartered Accountant, he has tried to catch the pulse of India’s economy very well. HDFC Bank has always had good leadership and this leadership has got freedom to take decisions from the Board of Directors which has been a major factor in the success of HDFC Bank. We have tried to put before you the case study of HDFC Bank in simple language using more technical language.