Professional Documents
Culture Documents
ON
EMPOLYEES PERFORMANCE APPRAISAL
IN
H.D.F.C BANK
In the fulfillment of the requirement of the award of degree
Of
Session 2007-2009
DECLARTION
1
I hereby certify that the work which is being presented here in the project name
employees performance appraisal in H.D.F.C bank in fulfillment of the
requirement for the award of the degree of Master of Business Administration
under Punjab Technical University, Jalandhar, is an authentic record of my own
work carried out during 4th semester from 2nd- Feb-2009 to 7th-April -2009, under
the supervision of Mrs.Vikramjeet Kaur.
The matter presented here has not been submitted by me for the award of any
other degree of this or any other university.
Harpreet Kaur(MBO7578)
This is to certify that the above statement made by the candidate is correct to the
best of my knowledge.
Mrs.Vikramjeet Kaur
(Project Guide)
ACKNOWLEDGMENT
My working in this project is not only my efforts but this is to the result of the
guiednce, assistance and inspiration of several people who helped me
throughout my final project report.
I express my every debt of perfouned gratitude to Mrs.Vikramjeet Kaur (prof.H.R)
for her support in executing this project from its conceptual to completion stage.
I would like to thank Dr.D.S.Randhawa (Director-Principal of Rayat Institute of
Management) our course co-ordinator, who made it possible for me.
PREFACE
Managing human resources in todays dynamic environment is becoming more and more
complex as well as important. Recognition of people as a valuable resource in the
organization has led to increases trends in employee maintenance, job security, etc
My research project deals with Performance Appraisal as carried out at H.D.F.C Bank.
In this report, I have studied &evaluated the performance appraisal process as it is carried
out in the bank.
The first section of my report deals with a detailed company profile. It includes the
companys history: its activities and operations, organizational structure, etc. This section
attempts to give detailed information about the company and the nature of its functioning.
The second section deals with performance appraisal. In this section, I have given a brief
conceptual explanation to performance appraisal. It contains the definition, process and
significance of performance appraisal.
In the third section of my report, I have conducted a research study to evaluate the
process of performance appraisal at H.D.F.C Bank. This section also contains my
findings, conclusions, suggestions and feedback.
The forth and final section of this report consists of extra information that I related to the
main contents of the report. These annexure include some graphs and diagrams relating to
the bank, graphs relating to the research study and important documents upon which the
project is based.
Harpreet Kaur
EXECUTIVE SUMMARY
CHAPTERS CONTENTS
1
PAGE NO.
Introduction
1.1 Performance appraisal
1.2 Industry profile
1.3 H.D.F.C Bank
2 Review of Literature
59-62
3
4
5
6
63-67
68-82
83-84
85-86
Research Methodology
Data Analysis and Interpretation
Findings
Suggestion
7 Conclusion
87-88
8 Annexure
Bibliography
Questionnaire
89-97
INTRODUCTION
TO
PERFORMANCE APPRAISAL
INTRODUCTION
Performance appraisal is the process of obtaining, analyzing and recording information about
relative worth of an employee. The focus of the performance appraisal is measure improving the
actual performance of the employee and also the future potential of the employee. Its aim is to
measure what an employee does.
To judge the gap between the actual and the desired performance.
Helps to strengthen the relationship and communication between superior subordinates and
management employees.
To diagnose the strengths and weaknesses of the individuals so as to identify the training and
development needs of the future.
Provide clarity of the expectations and responsibilities of the functions to be performed by the
employees.
To judge the effectiveness of the other human resource functions of the organization such as
recruitment, selection, training and development.
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DISCUSSING RESULTS
The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The
focus of this discussion is on communication and listening. The results, the problems and the possible
solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be
given with a positive attitude as this can have an effect on the employees future performance. The purpose
of the meeting should be to solve the problems faced and motivate the employees to perform better.
DECISION MAKING
The last step of the process is to take decisions which can be taken either to improve the performance of the
employees, take the required corrective actions, or the related HR decisions like rewards, promotions,
demotions, transfers etc.
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12
3. PAIRED COMPARISON
A better technique of comparison than the straight ranking method, this method compares each employee
with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons,
the employees are given the final rankings.
5. FIELD REVIEW
13
In this method, a senior member of the HR department or a training officer discusses and interviews the
supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a
very time consuming method. But this method helps to reduce the superiors personal bias.
6. CHECKLIST METHOD
The rater is given a checklist of the descriptions of the behavior of the employees on job. The checklist
contains a list of statements on the basis of which the rater describes the on the job performance of the
employees.
8. FORCED DISTRIBUTION
To eliminate the element of bias from the raters ratings, the evaluator is asked to distribute the employees in
some fixed categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for
the categories on his own discretion.
Modern-Method
ASSESSMENT CENTRES
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An assessment centre typically involves the use of methods like social/informal events, tests and exercises,
assignments being given to a group of employees to assess their competencies to take higher
responsibilities in the future. Generally, employees are given an assignment similar to the job they would be
expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform
the assigned jobs and are evaluated on job related characteristics.
The major competencies that are judged in assessment centre are interpersonal skills, intellectual capability,
planning and organizing capabilities, motivation, career orientation etc. assessment centre are also an
effective way to determine the training and development needs of the targeted employees.
In this method, an employees actual job behavior is judged against the desired behavior by recording and
comparing the behavior with BARS. Developing and practicing BARS requires expert knowledge.
360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the
feedback about the employees performance comes from all the sources that come in contact with the
employee on his job.
15
360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team
members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can
provide valuable insights and information or feedback regarding the on-the-job performance of the
employee.
Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his
achievements, and judge his own performance. Superiors appraisal forms the traditional part of the 360
degree appraisal where the employees responsibilities and actual performance is rated by the superior.
Subordinates appraisal gives a chance to judge the employee on the parameters like communication and
motivating abilities, superiors ability to delegate the work, leadership qualities etc. Also known as internal
customers, the correct feedback given by peers can help to find employees abilities to work in a team, cooperation and sensitivity towards others.
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Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance
appraisal have high employee involvement and also have the strongest impact on behavior and
performance. It provides a "360-degree review" of the employees performance and is considered to be one
of the most credible performance appraisal methods.
360 degree appraisal is also a powerful developmental tool because when conducted at regular intervals
(say yearly) it helps to keep a track of the changes others perceptions about the employees. A 360 degree
appraisal is generally found more suitable for the managers as it helps to assess their leadership and
managing styles. This technique is being effectively used across the globe for performance appraisals.
Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc.
17
M.B.O Method
The concept of Management by Objectives (MBO) was first given by Peter Drunker in 1954. It can be
defined as a process whereby the employees and the superiors come together to identify common goals,
the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of
their performance and contribution and deciding the course of action to be followed. The essence of MBO is
participative goal setting, choosing course of actions and decision making. An important part of the MBO is
the measurement and the comparison of the employee actual performance with the comparison of the
employee actual performance with the standards set.
18
Performance Appraisal is being practiced in 90% of the organisations worldwide. Self-appraisal and potential
appraisal also form a part of the performance appraisal processes.
19
This approach was a past oriented approach which focused only on the past performance of the employees
i.e. during a past specified period of time. This approach did not consider the developmental aspects of the
employee performance i.e. his training and development needs or career developmental possibilities. The
primary concern of the traditional approach is to judge the performance of the organization as a whole by the
past performances of its employees
Therefore, this approach is also called as the overall approach. In 1950s the performance appraisal was
recognized as a complete system in itself and the Modern Approach to performance appraisal was
developed.
The modern approach to performance development has made the performance appraisal process more
formal and structured. Now, the performance appraisal is taken as a tool to identify better performing
employees from others, employees training needs, career development paths, rewards and bonuses and
their promotions to the next levels.
Appraisals have become a continuous and periodic activity in the organizations. The results of performance
appraisals are used to take various other HR decisions like promotions, demotions, transfers, training and
development, reward outcomes. The modern approach to performance appraisals includes a feedback
process that helps to strengthen the relationships between superiors and subordinates and improve
communication throughout the organization.
The modern approach to Performance appraisal is a future oriented approach and is developmental in
nature. This recognizes employees as individuals and focuses on their development.
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Lack of competence
Top management should choose the raters or the evaluators carefully. They should have the required
expertise and the knowledge to decide the criteria accurately. They should have the experience and the
necessary training to carry out the appraisal process objectively
Resistance
The appraisal process may face resistance from the employees and the trade unions for the fear of negative
ratings. Therefore, the employees should be communicated and clearly explained the purpose as well the
process of appraisal. The standards should be clearly communicated and every employee should be made
aware that what exactly is expected from him/her
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22
INDUSTRY PROFILE
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
23
Bengal in Calcutta in June 1806. A couple of decades later, foreign banks like
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, which was established
in 1865.
By the 1900s, the market expanded with the establishment of banks such as
Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai both of which were founded under private ownership. The Reserve Bank of India
formally took on the responsibility of regulating the Indian banking sector from
1935. After Indias independence in 1947, the Reserve Bank was nationalized
and given broader powers
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 have become more easy and convenient. The past days are witness to an
hour wait before withdrawing cash from accounts or a cheque from north of the
country being cleared in one month in the south.
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This section of banking deals with the latest discovery in the banking instruments
along with the polished version of their old systems
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
25
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.
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
independent. 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.
26
also been granting licenses 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.
27
tremendous potential. Unfortunately, during recent times the stock markets have been constrained by some
unsavory developments, which have led to retail investors deserting the stock markets.
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 schemes. 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.
28
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 liberalization 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 have 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.
29
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 dematerialized 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 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.
30
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.
Easy banking
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 organizations 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 organizations 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.
It is not possible to play the role of the Oracle of Delphi when a vast nation like India is involved. However, a
few tends are evident, and the coming decade should be as interesting as the last one.
This section is fully dedicated to the Tech Banking. A decade before, it was tough to belief that banking
sector will be at a finger tip. Now its possible. A mobile hand set with a connection is the only instrument
needed to make a gateway to your banking transaction, the latest innovation of technology.
Apart from the Mobile Banking, including of SMS Banking, Net Banking and ATMs are the major steps taken
by the banks in India towards modernization. With all these devises and systems, there is a complete
freedom to experience.
Check your account, transfer your fund, make payments and what more, do anything of everything what has
been followed in physical banking since ages. But this time no standing for hours in front of cash counter
and no time boundation in withdrawing your own money.
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With the advancement of technology and the birth of competition, banks are in the race of becoming the
best in the country. With an eye upon customer satisfaction policy they are providing best of the best
services with the minimum hazards.
Banks like ABN AMRO introduced banking with a coffee. It made a tie-up with one of the best coffee bar in
the country, Barista and remained open till late evening for customers with a setup of a coffee bar in the
premises. Few banks have introduced world ATM card to make travelers across the globe more safe and
secure. What else. Internet and Phone Banking is the call of the day for banks.
In this race towards the best, we have selected top 20 banks in the country from all segments. It is not the
ranking of banks but only for general information about the top banks in India
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33
The Managing Committee manages the affairs, business and funds of IBA. The managing Committee is
elected by the Ordinary members of the Association, and is the highest management and policy making
body of the association The Chairman of the Association heads upon the working of the Association. He
provides guidelines to the Association. The administrative head of IBA is the Chief Executive of IBA. He is
also the Secretary to the Managing Committee. He leads a team of executives, officers and other staff
members.
IBA constitutes standing committees/task forces/ small groups/ committees of experts from member banks
for the examining of various aspects relating to industry level issues to get solution Recommendations of
these groups/committees, are communicated to members with the approval of the managing committee or
taken up with the concerned authorities for action.
Bank Account
34
Open bank account - the most common and first service of the banking sector. There are different types of
bank account in Indian banking sector. The bank accounts are as follows:
Bank Savings Account - Bank Savings Account can be opened for eligible person / persons and
certain organizations / agencies (as advised by Reserve Bank of India (RBI) from time to time)
Bank Current Account - Bank Current Account can be opened by individuals / partnership firms /
Private and Public Limited Companies / HUFs / Specified Associates / Societies / Trusts, etc.
Bank Term Deposits Account - Bank Term Deposits Account can be opened by individuals /
partnership firms / Private and Public Limited Companies / HUFs/ Specified Associates / Societies /
Trusts, etc.
Bank Account Online - With the advancement of technology, the major banks in the public and
private sector has facilitated their customer to open bank account online. Bank account online is
registered through a PC with an internet connection. The advent of bank account online has saved
both the cost of operation for banks as well as the time taken in opening an account.
Note: - A minor account can be opened but jointly with a guardian and only the guardian would is allowed to
operate the account.
The Bank will provide you with details of various types of accounts that you may open with the
Bank.
You can have your choice on what type of account would best suit you, based on your needs and
requirements
35
The Bank will, prior to opening an account, require documentation and information as prescribed by
the "Know Your Customer" (KYC) guidelines issued by RBI and or such other norms or procedures
adopted by the Bank prior to opening the account.
The due diligence process that the Bank would follow, will involve providing documentation
verifying your identity, verifying your address, and information onyour occupation or business and
source of funds. As part of the due diligence process the Bank may also require an introduction
from a person acceptable to the Bank if they so deem necessary and will need your recent
photographs.
The Bank is required by law to obtain Permanent Account Number (PAN) or General Index Register
(GIR) Number or, where you do not possess such registration, declaration in Form No. 60 or 61 as
specified under the Income Tax Rules.
In the event that the account opening process is likely to take longer than normal, the Bank will
The Bank reserves the right, at its sole discretion, to open any account and at such terms as the Bank may
prescribe from time to time
Credit Card
Credit cards in India are gaining ground. A number of banks in India are encouraging people to use credit
card. The concept of credit card was used in 1950 with the launch of charge cards in USA by Diners Club
and American Express. Credit card however became more popular with use of magnetic strip in 1970.
Credit card in India became popular with the introduction of foreign banks in the country.
Credit cards are financial instruments, which can be used more than once to borrow money or buy products
and services on credit. Basically banks, retail stores and other businesses issue these.
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changed.
Don't sign a blank charge or debit slip.
Tear up carbons and save your receipts to check against your monthly statements.
Cut up old cards - cutting through the account number - before disposing of them.
37
Open monthly statements promptly and compare them with your receipts. Report mistakes or
discrepancies as soon as possible to the special address listed on your statement for inquiries.
Under the FCBA (credit cards) and the EFTA (ATM or debit cards), the card issuer must investigate
errors reported to them within 60 days of the date your statement was mailed to you.
Keep a record - in a safe place separate from your cards - of your account numbers, expiration
dates, and the telephone numbers of each card issuer so you can report a loss quickly.
Carry only those cards that you anticipate you'll need.
To Do:
Please sign on the signature panel on the reverse of the Card immediately with a non-erasable
ball-point pen (preferably in black ink). This will ensure that the benefits of membership are yours
and yours alone.
Keep the Card in a prominent place in your wallet. You will notice if it is missing.
One may have exceeded the borrowing limit or defaulted (constantly) on minimum payment due.
card-issuing bank.
The magnetic stripe on the reverse of the card is damaged i.e. has been scratched or exposed to
continuous heat/direct sunlight or magnetic field-like card kept near a TV set / other electronic
appliances.
Systems or technology failures have in rare instances also led to non acceptance of cards when
swiped through an Electronic Terminal.
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MasterCard
MasterCard is a product of MasterCard International and along with VISA are distributed by financial
institutions around the world. Cardholders borrow money against a line of credit and pay it back with interest
if the balance is carried over from month to month. Its products are issued by 23,000 financial institutions in
220 countries and territories. In 1998, it had almost 700 million cards in circulation, whose users spent $650
billion in more than 16.2 million locations.
VISA Card
VISA cards is a product of VISA USA and along with MasterCard is distributed by financial institutions
around the world. A VISA cardholder borrows money against a credit line and repays the money with interest
if the balance is carried over from month to month in a revolving line of credit. Nearly 600 million cards carry
one of the VISA brands and more than 14 million locations accept VISA cards.
America
n
Express
The world's favorite card is American Express Credit Card. More than 57 million cards are in circulation and
growing and it is still growing further. Around US $ 123 billion was spent last year through American Express
Cards and it is poised to be the world's No. 1 card in the near future. In a regressive US economy last year,
the total amount spent on American Express cards rose by 4 percent. American Express cards are very
popular in the U.S., Canada, Europe and Asia and are used widely in the retail and everyday expenses
segment.
Din
er club International
Diners Club is the world's No. 1 Charge Card. Diners Club cardholders reside all over the world and the
Diners Card is a all time favorite for corporate. There are more than 8 million Diners Club cardholders. They
are affluent and are frequent travelers in premier businesses and institutions, including Fortune 500
companies and leading global corporations.
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JCB Cards
The JCB Card has a merchant network of 10.93 million in approximately 189 countries. It is supported by
over 320 financial institutions worldwide and serves more than 48 million cardholders in eighteen countries
world wide. The JCB philosophy of "identify the customer's needs and please the customer with Service
from the Heart" is paying rich dividends as their customers spend US$43 billion annually on their JCB cards.
Grace
The number of days you have on a card before a card issuer starts charging you interest is called period.
Usually this period is the number of days between the statement date and the due date of payment. Grace
periods on credit cards are usually 2-3 weeks. However, there is likely to be no grace for balances carried
forward
from
previous
month
and
fresh
purchases
thereafter
if
any.
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Standard Card - It is the most basic card (sans all frills) offered by issuers.
Classic Card - Brand name for the standard card issued by VISA.
Gold Card/Executive Card - A credit card that offers a higher line of credit than a standard card.
Income eligibility is also higher. In addition, issuers provide extra perks or incentives to cardholders.
Platinum Card - A credit card with a higher limit and additional perks than a gold card.
Titanium Card - A card with an even higher limit than a platinum card.
The following are some of the plus features of credit card in India
Hotel discounts
Travel fare discounts
Free global calling card
Lost baggage insurance
Accident insurance
Insurance on goods purchased
Waiver of payment in case of accidental death
Household insurance
The country's first Gold Card was also issued from Visa in 1986.
The first international credit card was issued to a restricted number of customers by Andhra Bank in
1987 through the Visa program, after getting special permission from the Reserve Bank of India.
The credit cards are shape and size, as specified by the ISO 7810 standard. It is generally of
plastic quality. It is also sometimes known as Plastic Money.
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Money Transfer
Beside lending and depositing money, banks also carry money from one corner of the globe to another. This
act of banks is known as transfer of money. This activity is termed as remittance business. Banks generally
issue Demand Drafts, Banker's Cheques, Money Orders or other such instruments for transferring the
money. This is a type of Telegraphic Transfer or Tele Cash Orders.
It has been only a couple of years that banks have jumped into the money transfer businesses in India. The
international money transfer market grew 9.3% from 2003 to 2004 i.e. from US$213 bn. to US$233 bn. in
2004. Economists say that the market of money transfer will further grow at a cumulative 10.1% average
growth rate through 2008.
With the use of high technology and varieties of product it seems that "Free" money transfers will become
commonplace. We will see more bundling of tailored money services by banks and non-traditional entrants
that will include "free" money transfers. Many banks will even use money transfer services as loss-leaders in
order to generate account openings and cross-sell opportunities. The price evolution of money transfer
products for banks will be similar to that of consumer bill pay-the product is worth giving away as an account
acquisition tool to win overall market share and establish banking relationships.
ATM money transfer card products have had terrible bank adoption rates since being introduced in the last
three to four years. Remittees who are highly educated and have been already been exposed to ATM
technology in receiving countries tend to have an interest in this product. Money transfer to India is one of
the most important part played by the banks. This service provides peace of mind to either the NRIs or to the
visitors to India. Many Indian banks have ATM'S (automatic teller machine), enable to draw foreign currency
in
India.
By 2007, we will see a good percent of all foreign-born households doing some level of online banking. Firstmover banks will start having a window of opportunity to include online transfer functionality within the next
couple of years, which currently frequents traditional money transmitters such as Western Union. There is a
terrific opportunity for banks and non-banks to offer more robust global inter-institutional funds transfer
services online. More than half of Western Union's customers today are already banked, and most do not
have an alternative product marketed by their bank that is painless, quick, and cost-effective. That will
change as banks offer transfer services through their online channel.
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Loans
Banks in India with the way of development have become easy to apply in loan market. The following loans
are given by almost all the banks in the country:
Personal Loan
Car Loan or Auto Loan
Loan against Shares
Home Loan
Education Loan or Student Loan
In Personal Loan, one can get a sanctioned loan amount between Rs 25,000 to 10, 00,000 depending
upon the profile of person applying for the loan. SBI, ICICI, HDFC, HSBC are some of the leading banks
which deals in Personal Loan. Almost all the banks have jumped into the market of car loan which is also
sometimes termed as auto loan. It is one of the fast moving financial product of banks. Car loan / auto loan
are sanctioned to the extent of 85% upon the ex-showroom price of the car with some simple paper works
and a small amount of processing fee. Loan against shares is very easy to get because liquid guarantee is
involved in it.
Home loan is the latest craze in the banking sector with the development of the infrastructure. Now people
are moving to township outside the city. More number of townships are coming up to meet the demand of
'house for all'. The RBI has also liberalized the interest rates of home loan in order to match the repayment
capability of even middle class people. Almost all banks are dealing in home loan. Again SBI, ICICI, HDFC,
HSBC are leading.
The educational loan, rather to be termed as student loan, is a good banking product for the mass. Students
with certain academic brilliance, studying at recognized colleges/universities in India and abroad are
generally given education loan / student loan so as to meet the expenses on tuition fee/ maintenance
cost/books and other equipment.
43
Vis
a has recently introduced the 'Visa Money Transfer' option for its savings and current account holder of any
bank with a visa debit card. This facility helps its customer to transfer funds from his bank account to any
visa card either debit or credit within India.
A Visa Money Transfer is of similar kind, in many respects, to the third-party fund transfer option given by
some banks to its account holders through e-cheque, but this is restricted to only visa cardholders.
Fill the beneficiary details like visa card numbers, name, and address and then specify the amount
that needs to be transferred. For bank account specify the visa card number and credit card
number for paying credit card bill.
The time taken for money transfers could be the same or even more than that of a demand draft
i.e. two or three days or even more.
Currently there are no charges but limits have been set by certain banks on the current transfers.
It is available in 150 cities across the country now.
The transferred amount can neither be changed nor stopped once it is initiated.
44
Introduction
to
H.D.F.C.BANK
HDFC BANK
HDFC Bank was incorporated in August 1994 in the name of HDFC Bank Limited, with its registered office
in Mumbai, India. The Bank commenced operations as a Scheduled Commercial Bank in January 1995The
Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an in principle
approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBIs
liberalization of the Indian Banking Industry in 1994.
45
Headquartered in Mumbai, HDFC Bank, has a network of over 1412 branches spread over 528 cities across
India. All branches are linked on an online real-time basis. Customers in over 120 locations are serviced
through Telephone Banking. The Bank also has a network of about over 3275 networked ATMs across these
cities. HDFC Banks ATM network can be accessed by all domestic and international Visa / MasterCard,
Visa Electron / Maestro, Plus / Cirrus and American Express Credit / Charge cardholders.
HDFC Bank has won many awards for its excellent service. Major among them are Best Bank in India by
Hong Kong-based Finance Asia magazine in 2005 and Company of the Year Award for Corporate
Excellence 2004-05.
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team determined to accomplish
the vision of becoming a world-class Indian bank.
Customer Focus,
Operational Excellence
Product Leadership
People.
46
Increase our market share in Indias expanding banking and financial services industry by following a
disciplined growth strategy focusing on quality and not on quantity and delivering high quality customer
service.
Leverage our technology platform and open scaleable systems to deliver more products to more customers
and to control operating costs.
Maintain our current high standards for asset quality through disciplined credit risk management.
Develop innovative products and services that attract our targeted customers and address inefficiencies in
the Indian financial sector Continue to develop products and services that reduce our cost of funds.
Focus on high earnings growth with low volatility.
CBOP merge HDFC bank.
Management
Mr. Jagdish Kapoor took over as the bank's Chairman in July 2001. Prior to this, Mr. Kapoor was a Deputy
Governor of the Reserve Bank of India. The Managing Director, Mr. Aditya Puri, has been a professional
banker for over 25 years and before joining HDFC Bank in 1994 was heading Citibank's operations in
Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public
policy, administration, industry and commercial banking. Senior executives representing HDFC are also on
the board
Senior banking professionals with substantial experience in India and abroad head various businesses and
functions and report to the Managing Director. Given the professional expertise of the management team
and the overall focus on recruiting and retaining the best talent in the industry, the bank believes that its
people are a significant competitive strength.
47
48
In terms of performance, CBOP has not been performing well operationally its costs were high and growth
was low as compared to industry standards. While merging it with HDFC Bank would give it a shot in the
arm, as HDFC Bank is know to be among the best Indian bank for past many years.
For HDFC Bank, the merger would give increased presence in states like Punjab, Haryana and
Kerala and also increase its retail assets. It would also even out in terms of branch network and even
overtake ICICI Bank in number of branches. Centurion Bank of Punjab merged with HDFC Bank Ltd. with
effect from 23rd may 2008
With relaxation of norms due to happen in 2009, such time of deals may happen more in Indian banking
sector. And there may be many foreign banks who would be eying small private but tech-savvy banks such
as Yes Bank, Bank of Rajasthan, Dhanalaxmi Bank and Laxmi Vilas Bank for takeover.
HDFC Bank Limited (the Bank) operates in three segments: retail banking, wholesale banking and treasury
services. The retail-banking segment serves retail customers through a branch network and other delivery
channels. The wholesale banking segment provides loans and transaction services to corporate...
Retail-Banking Segment
The retail-banking segment serves retail customers through a branch network and other delivery channels.
This segment raises deposits from customers and makes loans and provides advisory services to such
customers. Revenues of the retail banking segment are derived from interest earned on retail loans, net of
commission (net of subvention received) paid to sales agents, interest on card receivables, gains / losses
from securitization receivables, fees for banking and advisory services and interest earned from other
segments for surplus funds placed with those segments.
In this business, the Bank provides financial services primarily to the middle class, mass affluent and highnet worth segments. The Banks range of retail financial products and services include various deposit
products, loans, credit cards, debit cards, depository (custody) services, investment advice, bill payments
and various transactional services. Apart from its own products, the Bank sells third-party financial products,
such as mutual funds and insurance to its retail customers. The Bank has invested in multiple channelsbranches, automated teller machines (ATMs), phone banking, Internet banking and mobile banking. The
distribution network was expanded with the number of branches increasing from 535 (in 228 cities) in March
2006, to 684 (in 316 cities) in March 2007, and the number of ATMs from 1323 to 1605 over the same
period. By March 2008, the bank had a total card base (debit and credit cards) of 9.1 million. The Bank is
also one of the leading players in the merchant acquiring business with over 61,000 Point-of-sale (POS)
terminals for debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a
leader in various net based B2C opportunities including a wide range of internet banking services for Fixed
Deposits, Loans, Bill Payments, etc
49
.Wholesale
Banking Segment
The wholesale banking segment provides loans and transaction services to corporate and institutional
customers. Revenues of the wholesale banking segment consist of interest earned on loans made to
corporate customers and the corporate supply chain customers, investment income from commercial paper,
debentures and bonds, interest earned on the cash float arising from transaction services, fees from such
transaction services and also trading operations on behalf of corporate customers in debt, foreign exchange
and derivatives segment.
In this business, the Bank provides its corporate and institutional clients a range of commercial and
transactional banking products, backed by quality service and relationship management. The Banks
commercial banking business covers the Emerging Corporate and Small and Medium Enterprise (SME)
segments. The Bank has four business groups catering to various SME customers extending a range of
banking services, including working capital and term finance, cash management services, foreign exchange
products and electronic banking. The Bank also achieved growth in its agriculture and micro finance
portfolios. With products, including the Kisan Gold Card, rural supply chain initiatives and commodity finance
covering the entire agriculture financing cycle, the Banks direct agriculture lending increased by over 40%
during the fiscal year ended March 31, 2007. The Bank has targeted potential outreach locations within a
certain radius of its semi-urban and rural branches, distributing a set of products that includes savings
accounts, fixed deposits, two wheeler and auto loans, kisan card loans, tractor loans and warehouse receipt
loans. The Bank has also rolled out special rural fixed deposit and savings account products. The Bank also
has specialized Agri Desks at certain branches across the country, which work as single point contacts for
farmers. The Bank has commenced direct lending to Self Help Groups (SHG). The Bank opened a branch
for lending to SHGs, in Thudiyalur village (Tamil Nadu).
50
2008
CNN-IBN
Nasscom IT User
Award 2008
Business India
Forbes Asia
Asian Banker
Excellence in Retail
Financial Services
Asia money
51
'Employer Brand of the Year 2007 -2008' Award - First Runner up, &
many more
Savings Account
Sweep-In Account
Demat Account
52
Capital structure
The authorized capital of HDFC Bank is Rs550 crore (Rs5.5 billion). The paid-up capital is Rs424.6
crore (Rs.4.2 billion). The HDFC Group holds 19.4% of the bank's equity and about 17.6% of the
equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS)
Issue). Roughly 28% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has
about 570,000 shareholders. The shares are listed on the Stock Exchange, Mumbai and the National
Stock Exchange. The bank's American Depository Shares are listed on the New York Stock
Exchange (NYSE) under the symbol 'HDB'.
53
Personal Banking
individual.
Wholesale Banking
Deals with all sorts of financial dealings with Corporate, medium and small
Enterprises, Financial Institutions and Trusts as well as the Government
NRI Banking Consists of personal banking relations with the Non Resident Indians (NRIs).
HDFC Bank has been recognized, rated and awarded by a number of Organizations (on successfully
operating in India for over a decade).
54
55
Literature review
56
Scott & Einstei (2005) Examined what a performance appraisal system is and what
difficulties there are in developing and implementing an effective system. It also explains that,
when designed and implemented correctly, a performance appraisal system can be a strong
competitive advantage.
57
Nourayi & Daroca( 2002)Examined how experience, research and analysis of the
corporate world and its practices reveal that paying for performance systems are crucial to
the success of an organization and are essential for a constant development of its workforce.
It looks at how paying for performance is relatively a new term when compared to?
Performance appraisal? Though both terms can be used interchangeably and have similar
meaning in the corporate world.
L. P. Stewart: ( 2009)
58
Testa& Murph (2005) Examined a type of work appraisal known as the 360-degree
performance appraisal, describes the discomfort typically felt during appraisal periods at work and explains
why, in spite of some shortcomings, the 360-degree performance appraisal is better than traditional
approaches to performance appraisals. The paper also appends the surveys that were used to conduct this
research.
Dresser&Dutton (2007)
59
RESEARCH
METHOLODOGY
60
Sample Size:
Sample size for this research is 20 that means 20 people from Roper has filled the questionnaire. Sample
size used was only fifty because of time constraint.
61
Sampling technique:
Sampling technique used for this study is convenience or incidental or accidental
technique (non-probability)
Objective
To carry out the study of H.D.F.C Bank we framed the following objectives
1 To. Identify the techniques of performance appraisal followed in H.D.F.C Bank
2. To study Employee attitude towards the present appraisal system.
62
Limitation
A few limitations and constraints came in way of conducting the present study, under
which the researcher had to work are as follows:
1) Although all attempts were made to make this an objective study, biases on
the part of respondents might have resulted in some subjectivity.
63
2) Though, no effort was spared to make the study most accurate and useful,
the sample Size selected for the same may not be the true representative of
the bank, resulting in biased results.
3) Some of the questionnaire could not be completed due to reasons other than
time factor.
64
No. of respondent
percentage
25%
40%
20%
15%
satisfied
Cant say
dissatisfied
INTERPRETATION
65
.The graph shows that25% employees of the h.d.f.c bank were fully satisfied with the
present appraisal system. The 40% employees of the h.d.f.c bank were satisfied with the
present appraisal system. The 20% employees of the h.d.f.c bank were give the answer
that they cant say anything adout the present appraisal system. The15% employees of the
h.d.f.c bank were dissatisfied with the present appraisal system
No. of respondent
percentage
Fortnightly
20%
monthly
30%
six monthly
20%
annually
15%
15%
not fixed
66
INTERPRETATION
The graph shows that 4 employees say that the performance appraisal is done fortnightly.
The 6 employees say that the performance appraisal is done monthly. The 4 employees
say that the performance appraisal is done six month. The 3 employees say that the
performance appraisal is done annually. . The 3 employees say that the performance
appraisal is not fixed.
67
No. of respondent
percentage
Appraisal committee
30%
supervisor
45%
self appraisal
25%
INTERPRETATION
The graph shows that 6 employees say that the performance appraisal is done through the
appraisal committee. The9 employees say that the performance appraisal is done by the
supervisor. The 5 employee says that the performance appraisal is done by self appraisal
method.
68
No. of respondent
percentage
traditional
0%
modern
20
10 0%
INTERPRETATION
The employees say that the bank management uses the modern method for the
performance appraisal of the employees
69
No. of respondent
percentage
20
100%
0%
0%
0%
INTERPRETATION
The employees say that the bank management uses the management by objective
method for the performance appraisal of the employees
No. of respondent
70
percentage
To large extent
35%
To some extent
25%
Cant say
25%
Not at all
15%
INTERPRETATION
The graph shows that 35% employees say that it identify the training need to large extent.
The25% employees say that it identifies the training need to some extent. The 25%
employees told that they cant say anything about it. The remaining 15% says it need not
at all.
Q7: Does the appraisal system help in polishing the skill or performance area?
No .of respondents
71
percentage
To large extent
45%
To some extent
35%
Cant say
20%
INTERPRETATION
The graph shows that 45%employees says that system help in polishing the skill or
performance area to large extent. The 35% employees says that system help in polishing
the skill or performance area to some extent. The remaining 20% employees tell that they
cant say anything about it.
No .of respondents
percentage
45%
72
To some extent
35%
Cant say
20%
INTERPRETATION
The graph shows that 45% employees say that system leads to identification of
hidden potential of the employees to large extent. The 35%employees say that system
leads to identification of hidden potential of the employees to some extent. The
remaining 20%employees tell that they cant say anything about it.
No .of respondents
Percentage
Almost always
12
50%
often
20%
20%
73
rarely
10%
never
0%
INTERPRETATION
The graph shows that 50%employees say that they get almost always the feedback of
performance appraisal. The 20% employees say that they get often the feedback of
performance appraisal. The 20employees say that they get the feedback only when
required. . The 10%employees say that they get the feedback rarely.
74
percentage
yes
20
100%
0%
no
INTERPRETATION
The employees say that the employee whose performance is average and below average
sent to training.
Q 11: Do the employees get the feedback of performance appraisal after this step?
Do the employees get the
feedback of performance
appraisal after this step?
No .of respondents
yes
20
100%
no
0%
75
Percentage
INTERPRETATION
The graph show that all employees get feedback after this step.
No .of respondents
Out standing
25%
good
45%
average
20%
Below average
10%
76
Percentage
INTERPRETATION
The graph shows that the overall assessment of performance appraisal 25% employees is
outstanding. The overall assessment of performance appraisal 45%employees is good The
overall assessment of performance appraisal 20%employees is average. The overall
assessment of performance appraisal 10%employees is below average
No .of respondents
Percentage
yes
20
100%
no
0%
Cant say
0%
77
INTERPRETATION
The graph shows that all employees say yes that the promotional policy is linked with the
performance appraisal system. The employees are promoted on account of their
performance of work and duties.
78
FINDINGS
After going through the entire project and the collected data, some findings have been
extracted as:
Most employees are appraised between six month only. Few employees are appraised
after one year.
30% employees are appraised by the appraisal committee. 45% employees are
appraised by their supervisor
25% employees are fully satisfied and 40% employees are satisfied with the present
appraisal system.20% employees says that they cant say anything about it. Rests are
not satisfied with the present appraisal system.
The bank used the modern method for performance appraisal. The bank uses the
m.b.o method.
79
35% employees say that the appraisal system help to identify the training need to
large extent and 25% employees says that the appraisal system help to identify the
training need to some extent. 25% employees say that they cant say anything about
it.
Most employees say that it helps in polishing the hidden skills of the employees.
SUGGESTIONS
80
It is proposed that appraisal evaluated on above factor be given suitable remarks for being given
different quantitative grade.
It should be noted that the appraisal form for each job position should be different as each job has
different knowledge and skill requirements. There should not be a common appraisal form for every
job position in the organization.
The time period for conducting the appraisal should be revised, so that the exercise becomes a
continuous phenomenon.
The job and role expected from the employees should be decided well in advance and that too with
the consensus with them.
A neutral panel of people should do the appraisal and to avoid subjectivity to a marked extent,
objective methods should be employed having quantifiable data.
81
CONCLUSION
82
CONCLUSIONS
The analysis and interpretation of data on study of performance appraisal and its
effectiveness in an organization led to the following conclusions:
In the organization the employees are satisfied with the present performance
appraisal system. There are few employees who are not satisfied and cant say
anything about it.
The employees performance is viewed on monthly base. There are few
employees whose performance is viewed annually and for some others review
time is not fixed.
The most employees say that it help in identification of the training need and in
polishing the skill of the employees.
The bank uses the modern method for the performance appraisal of the
employees.
The bank gives the feedback to the employees almost always on the base of their
performance.
If the employees performance is average and below average the bank provide
training, job rotation and counseling to improve their performance.
Overall employees are satisfied with the present performance appraisal system.
83
ANNEXURE
BIBLIOGRAPHY
84
BIBLIOGRAPHY
Reference Books
Aswathappa.k Human Resource and Personal Management Text and Cases Tata
McGraw-Hill Publishing Company limited Edition 2005
Decenzo.David.A Robbins Stephen p Human Resources Management Prentice
Hall of India Private Limited Edition 2002
85
Magazines
Budhwar and Sparrow 2008 Performance Appraisal System in Banking in India,
Dresser&Dutton 2007.Performance Appraisals
Gabris and Ihrke 2002 Performance Appraisals
J. D. Elicker, P. E. Levy, and R. J. Hall August 1, 2006 The Role of LeaderMember Exchange in the Performance Appraisal Process
86
Web links
www.h.d.f.c bank .com
http://www.academon.com/lib/essay/.html
87
QUESTIONNARIE
88
Questionnaire
Name:
Contact no:
Sex:
b) satisfied
c) Cant say
d) dissatisfied
b) monthly
d)
e) not fixed
annually
c) six monthly
b) modern method
89
c) self appraisal
a) Management by objective
b) 360 degree
b) to some extent
c) Cant say
d) not at all
Q 8) does the appraisal system help in polishing the skill or performance area?
a) To large extent
b) to some extent
c) cant say
b to some extent
c cant say
e) never
90
a) Yes
b) no
Q12) Do the employees get the feedback of performance appraisal after this step?
a) Yes
b) no
b) very good
d) satisfactory
e) poor
c) good
Q14) Is the promotional policy linked with the performance appraisal system?
a) Yes
b) no
c) cant say
91