A Project Report

On
“Customer satisfaction in banking and insurance

industry of HDFC Bank”

Submitted in partial fulfillment of the requirement for the

Award of Degree of Bachelor of Business Administration

Submitted by:
Anchit Agarwal

Maharaja Surajmal Institute

(Affiliated to G.G.S.I.P. University & NAAC 'A' grade accredited.)

C-4, Janakpuri, New Delhi-58

1
 Certificate from Guide

This is to certify that the project titled “Customer satisfaction in banking and insurance
industry of HDFC Bank” is an academic work done by Anchit Agarwal submitted in the
partial fulfillment of the requirement for the award of the Degree of BBA from Maharaja
Surajmal Institute (Affiliated to G.G.S.I.P. University), New Delhi under my guidance and
direction. To the best of my knowledge and belief the data and information presented by him/her
in the project has not been submitted earlier.

Dr ANJU BATRA

ASST. Professor

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 ACKNOWLEDGEMENT
I gratefully acknowledge my gratitude to Director Sir, for providing me valuable guidance and
necessary support throughout the project. I also express my immense gratitude and thanks for
providing me a good direction towards this project. At the same time I am thankful to my
lecturers, and also I am thankful to my friends who are helped me to make this study
successfully.

Anchit Agarwal

(60814901716)

3
 S.No Topic Page No
1 Chapter I: Introduction 5
2  Objectives of the project 15
3  Review of Literature 16
4  Research Methodology 27
5  Limitation 29
6 Chapter II: Company Profile 30
7 Chapter III: Data Analysis and Interpretation 42
8 Chapter IV: Conclusion & Recommendation 57
9  Conclusion 57
10  Recommendation 58
11 BIBLIOGRAPHY 59

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Chapter I: Introduction
The Indian economy is emerging as one of the strongest economy of the world with the GDP

growth of more than 8% every year. This has given a great support for the development of

banking industry in the country .Due to recession it has come down to 5.7%. But market now

stabilizing.

Due to globalization, competition among the banks has drastically been increased .As India has a

substantial upper and middle class income hence the banks have immense opportunities to

increase their market shares. The consumer being on the receiving end is in the comfortable

position but the banks trying to increase their market share have to continuously add value for

consumers in order to increase market share and sustain their growth.

BANKING SECTOR

The banking sector is the most dominant sector of the financial system in India. Significant

progress has been made with respect to the banking sector in the post liberalization period. The

financial health of the commercial banks has improved manifolds with respect to capital

adequacy, profitability, and asset quality and risk management. Further, deregulation has opened

new opportunities for banks to increase revenue by diversifying into investment banking,

insurance, credit cards, depository services, mortgage, securitization, etc. Liberalization has

created a more competitive environment in the banking sector

Insurance may be described as a social device to ensure protection of economic value of life and

other assets. Under the plan of insurance, a large number of people associate themselves by

sharing risks attached to individuals. The risks, which can be insured against, include fire, the

perils of sea, death and accidents and burglary. Any risk contingent upon these, may be insured

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against at a premium commensurate with the risk involved. Thus collective bearing of risk is

insurance.

Insurance is a contract whereby, in return for the payment of premium by the insured, the

insurers pay the financial losses suffered by the insured as a result of the occurrence of

unforeseen events. The term "risk" is used to describe the possibility of adverse results flowing

from any occurrence or the accidental happenings, which produce a monetary loss.

Insurance is a pool in which a large number of people exposed to a similar risk make

contributions to a common fund out of which the losses suffered by the unfortunate few, due to

accidental events, are made good. The sharing of risk among large groups of people is the basis

of insurance. The losses of an individual are distributed over a group of individuals.

Definitions:

General definition:

In the words of John Magee, “Insurance is a plan by themselves which large number of people

associate and transfer to the shoulders of all, risks that attach to individuals.”

Fundamental definition:

In the words of D.S. Hansell, “Insurance accumulated contributions of all parties participating in

the scheme.”

Contractual definition: In the words of justice Tindall, “ Insurance is a contract in which a sum

of money is paid to the assured as consideration of insurer‟s incurring the risk of paying a large

sum upon a given contingency.”

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Characteristics of insurance

 Sharing of risks

 Cooperative device

 Evaluation of risk

 Payment on happening of a special event

 The amount of payment depends on the nature of losses incurred.

 The success of insurance business depends on the large number of people insured against

similar risk.

 Insurance is a plan, which spreads the risk and losses of few people among a large number of

people.

 The insurance is a plan in which the insured transfers his risk on the insurer.

 Insurance is a legal contract which is based upon certain principles of insurance which

includes, utmost good faith, insurable interest, contribution, indemnity, causas proxima,

subrogation, etc.

Functions of insurance:

Primary functions:

1. Provide protection:- Insurance cannot check the happening of the risk, but can provide for the

losses of risk.

2. Collective bearing of risk: - Insurance is a device to share the financial losses of few among

many others.

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3. Assessment of risk: - Insurance determines the probable volume of risk by evaluating various

factors that give rise to risk.

4. Provide certainty: - Insurance is a device, which helps to change from uncertainty to

certainty.

Secondary functions:

1. Prevention of losses: - Insurance cautions businessman and individuals to adopt suitable

device to prevent unfortunate consequences of risk by observing safety instructions.

2. Small capital to cover large risks: - Insurance relives the businessman from security

investment, by paying small amount of insurance against larger risks and uncertainty.

3. Contributes towards development of larger industries.

Other Function:

Means of savings and investment:

Insurance companies are business houses. The product they sell is financial protection. To

succeed and survive, they must cover their costs, which include payments to cover the losses of

policyholders, as well as sales and administrative expenses, taxes and dividends.

Insurance companies have two sources of income for covering these costs: premiums and

investment income. The premiums are collected on a regular basis and invested in Government

Bonds, Gilt, stocks, mutual funds, real estates and other conservative avenues. However,

investment income depends on market conditions, interest rates, economy etc. and varies from

year to year. Because of the uncertainty associated with the investment income, insurance

companies must generate enough income from premiums to cover the bulk of their expenses.

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The risk becomes insurable if the following requirements are complied with:

 The insured must suffer financial loss if the risk operates.

 The loss must be measurable in money,

 The object of the insurance contract must be legal.

 The insurer should have sufficient knowledge about the risks he accepts.

Fundamentals of Insurance

The fundamental Principles of the Insurance are as follows:

 Insurable Interest: Insurable interest means the legal right to insure. Insurable Interest is a

must and only then the insurance contract is enforceable at law. This principle differentiates a

Contract of insurance from wager. Lack of insurable interest renders the contract null and

void. For Insurable Interest to exist there must be Property, Rights, Interest, Life or

 Liability; this must be insured and the Insured should have a legally recognizable relationship

thereto. The Insured should be benefited by the safety of the property or is prejudiced by its

loss. Insurable Interest may arise in the following manner:

 Ownership: Absolute ownership entitles the owner to insure the property. This is the

commonest method whereby Insurable Interest arises.

 Partial Interest is also insurable e.g. a mortgagee. A creditor can also insure the life

of his debtor but only to the extent of his loan.

 Administrators and executors i.e. officials appointed by a court of law to take care

of a property may also insure the property.

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  Relationship does not automatically constitute insurable interest. The only

relationship recognized by law for this purpose is the one between a husband and

wife.

 An employer can insure his employee under a Personal Accident Policy as he has

insurable interest in them.

 Proximate cause: Generally, the claims are payable under insurance policies if they arise out

of events which are proximately caused by the insured perils. In other words, the proximate

cause of the event has to be peril covered by the policy, so as to constitute a valid claim.

 Contribution: An insured may have several insurance on the same subject matter. If he

recovers his loss under all these insurance, he will obviously make a profit out of loss. This

will be an infringement of the principle of indemnity. Common Law has, therefore, evolved

the doctrine of contribution whereby the insured is prevented from recovering more than his

loss, despite his having several insurance on the subject matter.

 Subrogation: The principle of indemnity seeks to prevent the insured from making profit out

of loss. However, it may so happen that that the insured may recover his loss under his policy

and he may also have rights against third parties. If, after the insurance claim is settled, the

insured is allowed to enforce his rights against third parties and to retain whatever damages

he receives from them, he will certainly make a profit and the principle of indemnity will be

infringed.

Common Law has therefore, evolved the doctrine of subrogation as corollary to the principle

of indemnity. Subrogation may be defined as the transfer of rights and remedies of the

insured to the insurers who have indemnified the insured in respect of the loss. The Common

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 Law right of subrogation is implied an all contracts on indemnity, as it arises only after

payment of loss.

 Utmost Good Faith: In all General Insurance contracts we know that a property or interest

or liability or life is offered for insurance and the insured has to take decisions on the

acceptance of the proposal. If he decides to accept the proposal a premium commensurate

with the risk has to be charged. To enable him to take necessary decision in this regard, the

insurer must have certain facts about the risk offered. These facts influence the judgment of

the insurer in deciding about the acceptance or otherwise of the risk and the rate of premium

to be charged, if accepted. Such facts are known as material facts.

Nature of Insurance Contracts

When the insured pays the premium and the insurers accept the risks, the contract of insurance is

concluded. The policy issued by the insurers is the evidence of the contract. The contract of

insurance, like any other contract, for example a contract for the sale of goods, is subject to the

general law of contract as embodied in the Indian Contract Act,1872.

According to this Act, a contract must have certain essential features in order to make it legally

valid and enforceable. The following are the essential elements:

 Offer and acceptance: Usually, the offer is made by the proposer, and acceptance made

by the insurer.

 Consideration: This means that the contract must involve some mutual benefit to the

parties. The premium is the consideration from the insured and the promise to indemnity

is the consideration from the insurers.

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  Agreement between the parties: Both the parties should agree to the same thing in the

same sense.

 Capacity of the parties: Both the parties to the contract must legally competent to enter

into the contract. For example, minors cannot enter into insurance contracts.

 Legality: The object of the contract must be legal and the contract should not violate any

legal requirements. E.g. no insurance can be had for smuggled goods.

Risk

Reasonable or not, risks are inescapable in business. Every business venture is something of a

gamble, because the possibility of loss is as real as the prospects for profits. And even though

managers do everything possible to ensure that their business succeeds, they cannot guard

against every conceivable form of risk.

Pure Risk versus Speculative Risk

 Pure Risk: Events representing the kind of risk that no business can predict or escape, known

as Pure Risk, it is the threat of a loss without the possibility of gain. In other words, a disaster

such as avalanche or fire is costly for the business it strikes, but the fact that no disaster

occurs contributes nothing to a firm's profit.

 Speculative Risk: It is the type of risk that offers the prospect of making profit - and prompts

people to go into business in the first place. Every business accepts the possibility of losing

money in order to make money.

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Approaches to Risk Management

Risk Management is the process of reducing the threat of loss due to uncontrollable events. Steps

in selecting a risk management approach:

 To identify all the things those can possibly go wrong. ·

 To consider the probability that an event will occur.

Techniques of Risk Management are:

1. Avoiding the Risk: When a company avoids risk, it eliminates the possibility that a particular

event will occur. To avoid the possibility of a suit, for example, not to produce any products -

which would, of course, eliminate both the threats of a lawsuit and the opportunity to profit.

With rare exceptions, avoiding risk entirely is extremely difficult.

2. Reducing Risk: A more practical approach is to reduce the risk by taking precautions. Risk

reduction is an important element in most companies' approach to risk management. Typical

precautions include putting safety locks on doors to prevent robberies, installing overhead

sprinklers to minimize fire damage, and periodic checking motor vehicles to prevent accidents.

3. Assuming risk: Many companies draw on current revenues or set aside a "Contingency Fund"

to cover unexpected losses. Setting aside money on regular basis could be cheaper than

purchasing insurance. Moreover, the company can earn interest on the reserved cash. Such

assumption of risk is also called self-insurance or risk retention.

4. Transferring the risk: Most companies still rely on outside insurance firms for financial

protection against catastrophic losses. In buying insurance, companies transfer the risk of loss to

an insurance firm, which agrees to pay for certain types of losses. In exchange, the insurance

firm collects a fee known as a premium.

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Insurable and Uninsurable Risks:

Insurable risks: An insurable risk - one that an insurable company will cover - Generally meets

the following requirements. The peril insured against must not be under the control of the

Insured. This means, of course that insurer do not pay for losses that are intentionally caused by

an insured, caused at the Insured's direction, or caused with the insured's collusion. For example,

a fire insurance policy excludes loss caused by the Insured‟s own arson. It does, however,

include loss caused by an employee's arson. Losses must be calculable, and the cost of insuring

must be economically feasible. To operate profitably, insurance companies must have data on the

frequency of losses caused by a given peril. If this information covers a long period of time and

is based on a large number of cases, Insurance companies can usually predict quite accurately

how many losses will occur in the future. For example, the insurance companies to fix up the rate

of premium of Personal Accident Insurance may use the information of the number of people

who will die each year in India in accidents. The peril must be unlikely to affect all insured

simultaneously. Unless an insurance company spreads its coverage over large geographic areas

or a broad population base or different classes of Insurance, a single disaster might force it to pay

out all its policies at once. The possible loss must be financially serious to the Insured. An

Insurance company could not afford the paperwork involved in handling numerous small claims

of a few Rupees each.

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Objectives of the project

 To know the customer satisfaction level and their perception regarding HDFC Bank.

 To know the customer awareness regarding the Bank‟s products.

 To know the level of interest of customer regarding the different schemes of bank.

 To know the preference of customer regarding the extra services.

 To know the problems of customer regarding bank.

 To analyze Marketing Mix and Promotional Strategies of HDFC Bank.

 To find how effectively advertisements influence a person to buy the life insurance

products

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Review of Literature
Literature no. 1

A study by Garg & Verma(2010)1, The insurance firms should focus on the concept of MM and

implement the concept. They should quantify the level of expenditure for their mix ingredients,

study elasticity of the mix ingredients, carry out careful analysis in order to identify the most

effective and economic mix, analyze their competitors‟ mix while implementing MM, review the

whole mix in detail so that each segment gets its own assemblage of mix components, and

review their MM on a regular basis. The marketing departments of the insurance firms should

call other functional departments while developing MM and provide details of their thinking on

the subject.

Literature no. 2

In the study by Abdalelah S. Saaty(2011)2, attempts to find out the factors important in

developing a suitable marketing strategy for insurance companies. It investigates the reasons for

buying insurance by the current users of insurance, reasons for not buying insurance by non-

users of insurance and the issues and problems faced by Saudi Insurance industry.

The results of the study show that the social and regulatory factors played crucial role in the

consumer‟s decision in purchasing insurance. However it was also found that the public at large

is unaware about the benefits of insurance, and various types of insurance products. The

insurance companies shall focus of promotional marketing strategies. The marketer‟s primary

focus should be on promotional activities.

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Literature no. 3

A study by D‟Andrea & Schleicher(2006)3. Attempts to understand the role of promotions

among other key drivers at determining consumer‟s overall store price image (OSPI) of grocery

stores in Latin America, identifying its relative importance.

Pricing is a relevant issue to customers as well as for retailers. However, this research shows that

price promotions and its advertisement may blur the consumer‟s possibilities of identifying

which retailer runs the best prices and minimizes their overall purchasing cost. At the same time,

it makes harder to the retailer to find which factors are more effective in forming the overall

store price image (OSPI). Further understanding of how OSPI is built seems necessary in order

to help retailers make the right decisions that will not confuse consumers.

However, a review of the literature shows that most of the studies have concentrated at the

product level, or have considered isolated variables. Our research was then set for understanding

the relative importance of the different factors that form the OSPI, and consider the differences

towards price promotions across consumer segments and markets.

Literature no. 4

A study by Pulidindi Venugopal(2010)4. Attempts to understand the attitude of insured on agents

and promotional activities of life insurance companies

Life Insurance is conceptual and intangible in its nature and it is not understood by majority of

the Indian population. Even though every insurer knows that it is not bought and it has to be sold,

there is a lot of gap among promotional activities and advisors (agents). Hence it caused

complications in marketing its products. Making the uneducated, rural and economically

17
backward people to understand the insurance concept is a challenging task. Insurers may succeed

if they develop separate strategies for each segment. Promotional activities and agents of life

insurance companies is all about to inform, bringing awareness, develop belief, to reinforce trust

etc. in the minds of the consumers by using tools such as advertising, public relations, displays,

word of mouth, sales promotion, personal selling etc. Promotion bring positive attitude or may

cause negative attitude so knowing the feelings of respondents found essential. Today customers

are more informed with number of options, even still majority of the customers trusts only LIC.

Therefore it is the duty of all insurers to study the attitudes of customers on their agents and

promotional activities to reinforce trust in the customers.

Literature no. 5

A study by Beenish Shameem & Dr Sameer Gupta(2012)5. The study is designed to evaluate the

marketing strategies in life insurance service sector & how these strategies boost sales &

marketability of a product which ultimately lead to customer satisfaction. The insurance scenario

faces multiple challenges such as increased costs of operation, regulatory pressures, and

inflexible technology infrastructure. These pressures are compounded by low to moderate

premium growth & the increasing burdens of regulatory compliance. Keeping all the above

problems around the study would attempt to study all the factors that contributed to the effective

marketing strategies. This paper presents different marketing strategies that are taken up in life

insurance services keeping in view external and internal environment of the firm. Marketing

strategy is the basic approach that the business units will use to achieve its objectives, and it

consists of broad decisions on target markets, market positioning and mix, and marketing

expenditure levels.

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Life insurance is a form of insurance that pays monetary proceeds upon the death of the insured

covered in the policy. Essentially, a life insurance policy is a contract between the named insured

and the insurance company wherein the insurance company agrees to pay an agreed upon sum of

money to the insured's named beneficiary so long as the insured's premiums are current.

With a large population and the untapped market area of this population

insurance happens to be a very big opportunity in India. Today it stands as a business growing at

the rate of 15-20% annually. Nearly 80% of Indian populations are without life insurance cover

and the health insurance. This is an indicator that growth potential for the insurance sector is

immense in India.

Insurance is the business of providing protection against financial aspects of

risk, such as those to property, life health and legal liability. It is one method of a greater concept

known as risk management –which is the need to mange uncertainty on account of exposure to

loss, injury, disadvantage or destruction.

The business of insurance is related to the protection of the economic values of

assets. Every asset has a value. The asset would have been created through the efforts of the

owner. The asset is valuable to the owner, because he expects to get some benefit from it. The

benefit may be an income or in some other form.

Classification of insurance:

1) Life insurance.

2) Non-life (general) insurance.

1) Life insurance:-

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 Life insurance can be defined as “life insurance provides a sum of money if the person

who is insured dies while the policy is in effect”.

In 1818 British introduced to India, with the establishment of the oriental life insurance

company in Calcutta. The first Indian owned Life Insurance Company; the Bombay mutual life

assurance society was set up in 1870. The life insurance act, 1912 was the first statuary measure

to regulate the life insurance business in India. In 1983, the earlier legislation was consolidated

and amended by the insurance act, 1938, with comprehensive provisions for detailed effective

control over insurance. The union government had opened the insurance sector for private

participation in 1999, also allowing the private companies to have foreign equity up to 26%.

Benefits of life insurance:

 Life insurance encourages saving and forces thrift.

 It is superior to a traditional savings vehicle.

 It helps to achieve the purpose of life assured.

 It can be enchased and facilitates quick borrowing.

 It provides valuable tax relief.

Fundamental principles of life insurance contract:-

1) Principle of almost good faith:

“A positive duty to voluntary disclose, accurately and fully, all facts, material to the risk being

proposed whether requested or not”.

2) Principle of insurable interest:

“Relationships with the subject matter (a person) which is recognized in law and gives legal

right to insure that person”.

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2) Non-life (general) Insurance:-

Triton insurance co. ltd was the first general insurance company to be established in India in

1850, whose shares were mainly held by the British. The first general insurance company to be

set up by an Indian was Indian mercantile insurance co. Ltd., which was stabilized in 1907.

There emerged many a player on the Indian scene thereafter.

The general insurance business was nationalized after the promulgation of General Insurance

Corporation (GIC) OF India undertook the post-nationalization general insurance business.

History of life insurance business in India

1850 Non life insurance debuts with triton insurance company. 1870 Bombay mutual

life assurance society is the first Indian owned life insurer

1912 The Indian Life Assurance Companies Act enacted as the first statute to regulate

the life insurance business.

1928 The Indian Insurance Companies Act enacted to enable the government to collect

statistical information about both life and non-life insurance businesses.

1938 Earlier legislation consolidated and amended to by the Insurance Act with the

objective of protecting the interests of the insuring public.

1956 245 Indian and foreign insurers and provident societies taken over by the central

government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a

capital contribution of Rs. 5 Crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the Triton

Insurance Company Ltd., the first general insurance company established in the year 1850 in

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Calcutta by the British. Some of the important milestones in the general insurance business in

India are:

1907 The Indian Mercantile Insurance Ltd. set up, the first company to transact all

classes of general insurance business.

1957 General Insurance Council, a wing of the Insurance Association of India, frames a

code of conduct for ensuring fair conduct and sound business practices.

1968 The Insurance Act amended to regulate investments and set minimum solvency

margins and the Tariff Advisory Committee set up.

1972 The General Insurance Business (Nationalization) Act, 1972 nationalized the

general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated

and grouped into four companies‟ viz. the National Insurance Company Ltd., the New India

Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance

Company Ltd. GIC incorporated as a company.

1993 Malhotra Committee, headed by former Finance Secretary and RBI Governor R.

N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future

direction. The Malhotra committee was set up with the objective of complementing the reforms

initiated in the financial sector. The reforms were aimed at “creating a more efficient and

competitive financial system suitable for the requirements of the economy keeping in mind the

structural changes currently underway and recognizing that insurance is an important part of the

overall financial system where it was necessary to address the need for similar reforms” In

1994, the committee submitted the report and some of the key recommendations included.

1997 Insurance regulator IRDA set up

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 2000 IRDA starts giving licenses to private insurers: Kotak Life Insurance, ICICI

prudential and HDFC Standard Life insurance first private insurers to sell a policy

2001 Royal Sundaram Alliance first non life insurer to sell a policy 2002 Banks

allowed selling insurance plans.

The Insurance Regulatory and Development Authority (IRDA)

The Insurance Act, 1938 had provided for setting up of the Controller of Insurance to act as a

strong and powerful supervisory and regulatory authority for insurance. Post nationalization, the

role of Controller of Insurance diminished considerably in significance since the Government

owned the insurance companies.

But the scenario changed with the private and foreign companies foraying

in to the insurance sector. This necessitated the need for a strong, independent and autonomous

Insurance Regulatory Authority was felt. As the enacting of legislation would have taken time,

the then Government constituted through a Government resolution an Interim Insurance

Regulatory Authority pending the enactment of a comprehensive legislation.

The Insurance Regulatory and Development Authority Act, 1999 is an act

to provide for the establishment of an Authority to protect the interests of holders of insurance

policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters

connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life

Insurance Corporation Act, 1956 and the General insurance Business (Nationalization) Act, 1972

to end the monopoly of the Life Insurance Corporation of India (for life insurance business) and

General Insurance Corporation and its subsidiaries (for general insurance business).

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 The act extends to the whole of India and will come into force on such date as

the Central Government may, by notification in the Official Gazette specify. Different dates may

be appointed for different provisions of this Act.

A new definition of "Indian Insurance Company" has been inserted. "Indian

insurance company" means any insurer being a company

(a) Which is formed and registered under the Companies Act, 1956

(b) in which the aggregate holdings of equity shares by a foreign company, either by itself or

through its subsidiary companies or its nominees, do not exceed twenty-six percent, Paid up

capital in such Indian insurance company

(c) Whose sole purpose is to carry on life insurance business, general insurance business or re-

insurance business?

WORKING OF LIFE INSURANCE INDUSTRY

Profit = Earned Premium + Investment Income – Incurred Loss – Underwriting expenses

Insurers make money in two ways:

1. Through Underwriting, the processes by which insurers select the risks to insure and

decide how much in premiums to charge for accepting those risks, and

2. By investing the premiums they collect from insured.

 Revenue = Premium

 Expenses = (Sum of Claims + Commission payable on procurement of business +

Operating expenses)

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  Operating Surplus = (Revenue – Expenses)

Net investment income includes income from trading in and holding stock market

securities including government securities, special deposits with the central government, loans to

several public utilities and service providers in state government. Insurance premium collected is

converted in a pool of fund then divided in to four expenses:

 To pay the expenses of the management

 To pay agency commission

 To pay for the claims

 Surplus money will be invested in govt. securities

BASIC POLICIES

 Endowment policies: This type of policy covers risk for a specified period, and at the

end of the maturity sum assured is paid back to policyholder with the bonuses during the

term of the policy.

 Money back policies: This type of policy is for periodic payments of partial survival

benefits during the term of the policy as long as the policy holder is alive.

 Group insurance: This type of insurance offers life insurance protection under group

policies to various groups such as employers employees, professionals, co-operatives etc

it also provides insurance coverage for people in certain approved occupations at the

lowest possible premium cost.

 Term life insurance policies: This type of insurance covers risk only during the selected

term period. If the policy holder survives the term, risk cover comes to an end. These

25
 types of policies are for those people who are unable to pay larger premium required for

endowment and whole life policies. No surrender, loan or paid up values are in such

policies.

 Whole life insurance policies: This type of policy runs as long as the policyholder is

alive and is covered for the entire life of the policyholder. In this policy the insured

amount and the bonus is payable only to nominee on the death of policy holder.

 Joint life insurance policies: These policies are similar to endowment policies in

maturity benefits and risk cover, but joint life policies cover two lives simultaneously

such as married couples. Sum assured is payable on the first death and again on the death

of survival during the term of the policy.

 Pension plan: a pension plan or annuity is an investment over a certain number of years

but does not provide any life insurance cover. It offers a guaranteed income either for a

life or certain period.

 Unit linked insurance plan: ULIP is a kind of insurance plan which provides life cover

as well as return on premium paid over a certain period of time. The investment is

denoted as units and represented by the value called as net asset value (NAV).

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Research Methodology
Research always starts with a question or a problem. Its purpose is to question through the

application of the scientific method. It is a systematic and intensive study directed towards a

more complete knowledge of the subject studied. Marketing research is the function which links

the consumer, customer and public to the marketer through information- information used to

identify and define marketing opportunities and problems generate, refine, and evaluate

marketing actions, monitor marketing actions, monitor marketing performance and improve

understanding of market as a process.

The data for this research project has been collected through self admiration. A structured

questionnaire was framed as it is less time consuming, generates specific and to the point

information, easier to tabulate and interpret. Moreover respondents prefer to give direct answers.

In questionnaires open ended and closed ended, both the types of questions has been used.

SAMPLING DESIGN

Since it is not possible to study whole population, it is necessary to obtain representative samples

from the population to understand its characteristics.

 Sampling Area: New Delhi

 Sampling Unit: Individuals respondents for studying consumer buying behavior selected

randomly from different parts of New Delhi

 Sampling technique: Random sampling

 Sample size: 100 respondents through different parts of New Delhi

 Research instrument: Structured Questionnaire

 Contact method: Direct Interview

27
DATA COLLECTION

There are two types of data collection method use in my project report.

– Primary data

– Secondary data.

For my project, I decided on primary data collection method for observing the working of

company and approaching customers directly in the field with the help of questionnaire prepared.

I decided on Secondary data collection method by referring to various websites, books,

magazines, journals and daily newspapers for collecting information regarding project under

study.

28
Limitation
 Lack of awareness among the people – This is the biggest limitation found in this

sector. Most of the people are not aware about the importance and the necessity of the

insurance in their life.

 Perception of the people towards Insurance sector – People still consider insurance

just as a Tax saving device. So today also there is always a rush to buy an Insurance

Policy only at the end of the financial year.

 Insurance does not give good returns – Still today people think that Insurance does not

give good returns. They are not aware of the modern Unit Linked Insurance Plans which

are offered by most of the Private sector players. They are still under the perception that

if they take Insurance they will get only 5-6% returns. Nowadays most of the modern

Unit Linked Insurance Plans gives returns which are many times more than that of bank

Fixed deposits, National saving certificate, and PPF.

 Lack of awareness about the earning opportunity in the Insurance sector – People

still today are not aware about the earning opportunity that the Insurance sector gives.

Companies in order to beat the competition and to increase their Insurance Advisors and

increase their reach to the customers are giving very high commission but people are not

aware of that.

 Increased competition – Today the competition in the Insurance sector has became very

stiff. Currently there are more than 20 Life Insurance companies working in India. Today

each and every company is trying to increase their Insurance Advisors so that they can

increase their reach in the market. This situation has created a scenario in which to recruit

Life insurance Advisors and to sell life Insurance Policy has became very very difficult.

29
Chapter II: Company Profile
HDFC Standard life insurance ltd is a joint venture company of HDFC bank and Standard

Life. HDFC STANDARD Life Insurance is a 74:26 joint venture between HDFC Bank Ltd. and

Standard Life. HDFC STANDARD Life Insurance is one of the fastest growing insurance

companies in India and has shown remarkable growth since its inception in 2000.

HDFC

HDFC is one of the India s leading institutions, offering complete financial solutions that

encompass every sphere of life. From commercial banking to stock broking, to mutual funds, to

life insurance, to investment banking, the group to the financial needs of individuals and

corporate.

The group has a personal worth of Rs.100000 crore and employees in its various businesses with

presence in 216 cities in India and offices in New York, London, Dubai and Mauritius, it

services a customer base over 1400000.

HDFC enjoys leadership position in most of the businesses including stock broking, investment

banking and retail lending. With a brand slogan of “CUSTOMER SATISFACTION “, HDFC

enjoys a particularly strong franchise in the arena of investment and capital markets. HDFC is

also known for the values of trust, integrity and financial prudence with which entire business

and franchise is developed .Not only they are the one of the most preferred company to do

business with, they are also one of the most preferred employers in the financial services

industry.

30
STANDARD LIFE

Standard Life has used its broad and well-established U.K. base to create a multinational

business and is building businesses in the US and Europe that focus on sectors of the market with

good fundamentals and where its skills can add value. As at 31 December 2005, 72% of funds

under management are in the United States; 24% in South Africa and 4% in United Kingdom

.On the embedded value bases the geographic split is 66% Africa, 25% the US and 9% rest of

world.

FUNCTIONAL DEPARTMENT OF THE ORGANIZATION

Chairman

Managing Director

Executive Director

Regional Sales Head

Area sales Head

Area Sales Manager

Deputy Sales Manager

Team Leader

Contract Sales Executive

31
 ORGANIZATION STRUCTURE AND ORGANIZATION CHART

Chairman

Managing Director & C E O

Joint Managing Director Joint Managing Director

(Domestic Banking) (International Business)

Executive Director Executive Director Executive Director Executive Director

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

Sr. General Managers

General Managers

32
HISTORY

HDFC Standard Life Insurance Company Limited

The Partnership:

HDFC Standard Life first came together for a possible joint venture, to enter the Life Insurance

market, in January 1995. It was clear from the outset that both companies shared similar values

and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a 3

year joint venture agreement.

Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the

relationship.

The next three years were filled with uncertainty, due to changes in government and ongoing

delays in getting the IRDA (Insurance Regulatory and Development authority) Act passed in

parliament. Despite this both companies remained firmly committed to the venture. In October

1998, the joint venture agreement was renewed and additional resource made available. Around

this time Standard Life purchased 2% of Infrastructure Development Finance Company Ltd.

(IDFC). Standard Life also started to use the services of the HDFC Treasury department to

advise them upon their investments in India.

Towards the end of 1999, the opening of the market looked very promising and both companies

agreed the time was right to move the operation to the next level. Therefore, in January 2000 an

expert team from the UK joined a handpicked team from HDFC to form the core project team,

based in Mumbai.

33
Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC

Bank.

In a further development Standard Life agreed to participate in the Asset Management Company

promoted by HDFC to enter the mutual fund market. The Mutual Fund was launched on 20th

July 2000.

Incorporation of HDFC Standard Life Insurance Company Limited:

The company was incorporated on 14th August 2000 under the name of HDFC Standard Life

Insurance Company Limited.

Their ambition from the beginning was to be the first private company to re-enter the life

insurance market in India. On the 23rd of October 2000, this ambition was realised when HDFC

Standard Life was the first life company to be granted a certificate of registration.

HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while Standard Life owns

18.6%. Given Standard Life's existing investment in the HDFC Group, this is the maximum

investment allowed under current regulations.

HDFC and Standard Life have a long and close relationship built upon shared values and trust.

The ambition of HDFC Standard Life is to mirror the success of the parent companies and be the

yardstick by which all other insurance companies in India are measured.

34
COMPANY JOURNEY

FIG.-1: SHOWS THE COMPANY JOURNEY FROM 1985-2007

35
VISION STATEMENT
 The Global Indian Financial services brand: Their customers will enjoy the benefits of

dealing with a global Indian brand that understands their needs and delivers customized

pragmatic solutions across multiple platforms. They will be a world class Indian financial

service group. Their technology and best practices will be benchmarked along

international lines while their understanding of customers will be uniquely Indian. They

will be more than a repository of their customer‟s savings. They, the group, will be a

single window to every financial service in a customer‟s universe.

 The most preferred employer in financial services: A culture of empowerment and a

spirit of enterprise attract bright minds with an entrepreneurial streak to join us and stay

with us. Working with a home grown professionally managed company, which has

partnerships with international leaders, gives their people a perspective that is universal

as well as unique.

 The most trusted financial services company: They will create an ethos of trust across

all their constituents. Adhering to high standards of compliance and corporate governance

will be an integral part of building trust.

 Value creation: Value creation rather than size alone will be business driver.

36
LIFE INSURANCE AND HDFC LIFE

The Insurance market was opened up for private companies in year 2000 and currently there are

15 Life Insurance companies in India. HDFC Life Insurance in its fifth year of operations has

shown commendable results. In FY 2005-06, HDFC Life Insurance laid special emphasis on

strengthening the Quality of Business and succeeded remarkably in the achieving its goals.

Instead of just top line growth it has concentrated on better quality business through focusing on

long term regular premium business and 90% + persistency. For the second year in succession, it

has met the internal value creation target which gives the confidence that going forward it will be

able to maintain both aggressive top line growth and reduce losses to achieve break even by

2008-09. The main focus would be to deliver superior value to the key stakeholders and the

employees. They have 650 branch offices in 31 cities in India and they are growing aggressively

to increase their footprints and bring Life Insurance products to their citizens.

From a macro perspective, investment in Life Insurance in developed countries is as much as

4.85% of GDP whereas in India it only accounts for 275%. Hence for the next few years due to

under insurance and inherent scope present, private life insurance companies will grow as close

to 100% year on year for the next few years until the gap is bridged. One of The key reason for

the under insurance has been a monopolistic industry prior to 2000 which led to under

development of the market. Life Insurance is an integral part of any Financial Planning activity.

Typically one could look at least 5-10% of the total Income to be invested towards Life

Insurance.

37
MISSION AND VALUES

Their Mission ( as stated in the Company's website ):

To be the top new life insurance company in the market.

This does not just mean being the largest or the most productive company in the market, rather it

is a combination of several things like-

 Customer service of the highest order

 Value for money for customers

 Professionalism in carrying out business

 Innovative products to cater to different needs of different customers

 Use of technology to improve service standards

 Increasing market share

Their Values:

 SECURITY: Providing long term financial security to our policy holders will be our

constant endeavour. We will be do this by offering life insurance and pension products.

 TRUST: We appreciate the trust placed by our policy holders in us. Hence, we will aim

to manage their investments very carefully and live up to this trust.

 INNOVATION: Recognising the different needs of our customers, we will be offering a

range of innovative products to meet these needs.

38
BRAND PERSONALITY

 HDFC Brand identity based on consumer perception and group aspiration.

 Knowledgeable of the latest business practices; has incorporated the best but believes that

ultimately successful business decisions are based on instincts rather than logical

processes.

 Values Indian traditional and rituals.

 HDFC is the quintessential Indian entrepreneur in touch with the global world.

 Constantly looking for new opportunities to grow business and make money.

 Believes in „no guts, no glory‟.

 HDFC is seen as a leader in their field, not only in thoughts but also in their ability to

spot opportunities and build on them.

MAKING OF A BRAND

 Started operation in October 2000.

 Need for private players to establish brands.

 Need to create a brand platform that would be unique, relevant and emotionally
compelling.

 Based their brand positioning on providing financial freedom- “Sar utha kar jeo.”

 Expressed through all customer touch points – Ads/Merchandising/Corporate Stationery

etc.

39
KEY IMPERATIVES OF COMPANY

To be a top five player in this industry in this, HDFC Life Insurance need to increase

Distribution width and depth trough the country. Insurance is sold primarily through three sales

channels:

 Tied agency network: sales manager recruit and develop life advisers who in turn

prospects for customers and sell insurance. It is a tide agency, as these agents (life

advisers) are their exclusive sales agents .key to success of a tide agency is that each sales

manager has a large number (successful SMs) have a team of 8 to 10 contributing Las)

OF LIFE ADVISERS who deliver 3-4 policies month on month consistently.

 Alternate channel: sales mangers works with channel partners who can use their

channels sales force to sell insurance of their brand. Channel partners in alternate channel

can be either a corporate agency or a broker. A corporate agency will always be exclusive

for their brand and sell for their company. A broker will be a multiband player and works

for the benefit of the customer. Alternate channels sales manager, apart from managing

existing partners, identify new partners, built relationships and use the channel sales force

to increase sales from that channel.

 Group sales: sales mangers sell to corporate /institutions where a group of homogeneous

character can be covered under a single insurance policy. Typically they work in the area

of employee benefit programme .They sell products like Superannuation, Gratuity, Group

Life Covers , EDLI and group credit term covers .Key difference from the first two

channels is that this channel does not insure individual lives but insures groups of

people.

40
SWOT Analysis

STRENGTH WEAKNESSES

 Right strategy for the right products.  Some gaps in range for certain sectors.

 Superior customer service vs.  Customer service staff needs training.

competitors.  Processes and systems, etc
 Great Brand Image  Management cover insufficient.

 Products have required accreditations.  Sectoral growth is constrained by

 High degree of customer satisfaction. low unemployment levels and

competition for staff
 Good place to work

 Lower response time with efficient

and effective service.

 Dedicated workforce aiming at

making a long-term career in the
field.
Opportunities Threats

 Profit margins will be good. Legislation could impact.

 Could extend to overseas broadly. Great risk involved
 New specialist applications.
Very high competition prevailing in the
 Could seek better customer deals. industry.
 Fast-track career development
Vulnerable to reactive
opportunities on an industry-wide
basis.
 An applied research centre to create attack by major competitors

opportunities fordeveloping Lack of infrastructure in rural areas could

techniques to provide added-value constrain investment.
services. High volume/low cost market is intensely
competitive.

41
Chapter III: Data Analysis and Interpretation
I have presented below the project findings and analysis, addressed to the respondents to gauge

the attitude, perception and consumer behavior of the people toward life insurance.

1. Market share of the key players in the life insurance sector in India.

SALES
1%
2% 1%
ICICI Pru
4%
5% Bajaj Allianz
3% 22% SBI Life
HDFC Standard
7%
Birla Sunlife
Reliance Life
8%
14% Max New York
Tata Aig
8%
Aviva
10%
7% Kotak Mahindra
8%
Met Life

INTERPRETATION

In life insurance sector ICICI Pru is the leading life insurance company in private sector,

followed by Bajaj Allianz, SBI life, HDFC standard, Birla Sun life and others.

42
2. Employed customers

The question was asked to that the policy holder is job holder or not?

Policy Holders

17%

Job holder
Non job holder
83%

INTERPRETATION

It was founded that 83% customers who have taken the policy are job oriented.

43
3. BENEFIT OF INSURANCE

What is the main cause of taking the life insurance policy?

Benefit
70%

60%

50%

40%

30% Benefit

20%

10%

0%
Future Security Tax Deductions Future Investment

Future Security 59%

Tax Deductions 28%

Future Investment 13%

INTERPRETATION

The majority of consumer find it as future security followed by tax saving.

44
4. Mode of buying life insurance policy

The question was asked to know that how a customer bought the policy weather it was customer

approach to company or company approach to customer.

Approach

42%

58% Company Approach

Others

INTERPRETATION

It was founded that 58% people have taken policy because of company approach and rest bought

either by their approach or other reasons.

45
5. Respondents having life insurance

The question was asked to the respondents to know how many of the respondents had a life

insurance policy.

Policy Holders

44%
Have Policy
Don't Have Policy
56%

INTERPRETATION

From the survey it was found that 44% of the respondents had a health insurance policy where as

56% of the respondents did not had a life insurance policy.

46
6. Satisfied with the policy

The question was asked to know that what percentage of customers is satisfied with the policies.

Satisfaction

9%

44%
Satisfied
47% Not Satisfied
Cant Say

INTERPRETATION

It was founded that majority of customer are not satisfied with their current policy.

47
7. From whose suggestion have the respondents taken a policy?

It was asked to gain an insight from the respondents that on whose suggestion they opted for a

life insurance.

Buying Process

18%

Company Approach
Influence Of Advertisment
24% 58% Friends & Family

INTERPRETATION

After the survey it was founded that 58% of the respondents took policy cover from the

suggestions of company approach. And only 24% respondents took policy on the

recommendation of the agents. Other sources like banks, corporate tie-ups and etc. play a minute

role in reaching out people for life insurance policy.

48
8. Which sector customer chose public or private?

Sector

44% Private

56% Public

INTERPRETATION

After the survey it was found that still major portion of customers go for public insurance

companies, but with the entry of more and more private companies the scenario is changing

rapidly, people need of more and better returns are opting for private companies, and this can be

justified by the increasing market share of private companies in the Indian insurance sector.

There are various ways in which private companies are found much more lucrative than public

companies and the fact which support this statement are as follows:

1. Versatility of products

2. Efficient fund managers

3. Better customer services

4. More returns

5. Regular follow up

49
9. Where do private life insurance companies need to improve?

This question was asked to know where private companies are lacking. It might be in term of

service, return, information, verity or easy claim.

Need To Improve
40%

35%

30%
25%
20%
15%
10% Need To Improve
5%
0%

INTERPRETATION

From the research it was found that there is a need for the private player to improvement in

certain sector to complete with the government sector companies, majority of the people think

that people think that private companies need to improve in easy claim and information.

50
10. For how long you are part of HDFC Bank?
Response No. of Respondents %age of Respondents

Less than 6 Months 20 20%

Less than 1 Year 37 37%

Less than 2 Years 14 14%

More than 2 Years 29 29%

Total 100 100%

20%
29%

14%
37%

Less than 6 Months Less than 1 Year

Less than 2 Years More than 2 Years

Interpretation:
From the above graph it is clear that majority of the respondents are part of HDFC Bank from

last one year i.e. 37%; 29% of the respondents are part of HDFC Bank from last more than 2

years; 20% respondents from 6 months and remaining 14% respondents are part of HDFC Bank

for last two years.

51
11. What are reasons that attract you to be a customer of the bank?
Response No. of Respondents %age of Respondents

Image 25 25%

Extra Services 25 25%

Services 45 45%

All of above 5 5%

45
40
35
30
image
25 Extra services
20 services
15 all of above
10
5
0
image

Interpretation:
From the above graph it is clear that majority of the respondents i.e. 45% are become part of

HDFC Bank because of its services; 25% because of its image; 25% because of its extra services

and rest because of all the three factors.

52
12. Are you aware of the different services offered by HDFC Bank?

Response No. of Respondents %age of Respondents

Yes 91 91%

No 9 9%

Total 100 100%

9%

91%

Yes No

Interpretation:

From the above graph it is clear that majority of the respondents are aware of products and

services offered by HDFC Bank i.e. 91% and 9% respondents are not aware of services offered

by HDFC Bank.

53
13. Which of these services are you further interested in?
Response No. of Respondents %age of Respondents

Saving a/c 20 20%

Fixed deposits 24 24%

Current a/c 10 10%

Demat a/c 0 0%

Credit cards 0 0%

Mutual funds 23 23%

Loans 19 19%

30

25 saving a/c
FD's
20
current a/c
15 demat a/c
credit cards
10
mutual funds
loans
5

Interpretation:

From the above graph it is clear that majority of the respondents are interesting in FD‟s i.e.

24%,20% are interesting in saving a/c, 40% current a/c, 23% mutual fund, 19% in loans and no

body is interesting in credit cards and demat a/c‟s.

54
14. Which service of the bank would you rate the best?

Response No. of Respondents %age of Respondents

Saving a/c 33 33%

Fixed deposits 40 40%

Current a/c 12 12%

Demat a/c 0 0%

Credit cards 0 0%

Mutual funds 10 10%

Loans 5 5%

40
35
saving a/c
30
FD's
25
current a/c
20
demat a/c
15 credit cards
10 mutual funds
5 loans

Interpretation:

From the above graph it is clear that 33% of the respondent rate saving a/c, the best product. 40%

said FD‟s are best. 12% said current a/c.10% said about mutual funds.5% said about loans and

no one rate demat a/c & credit card.

55
15. Do you know about the Extra services being provided by the bank?

Response No. of Respondents %age of Respondents

Yes 69 69%

No 41 41%

yes
69% no

Interpretation:

From the above graph it is clear that 69% of the respondents are known about the innovative

services and the rest is unknown about it.

56
Chapter IV: Conclusion & Recommendation
Conclusion
At the end I would like to conclude that The Indian banking market is growing at an astonishing

rate, HDFC Bank Limited is an Indian banking and financial services company headquartered in

Mumbai, Maharashtra. it has 88,253 permanent employees as on 31 March 2018 and has a

presence in Bahrain, Hong Kong and Dubai. HDFC Bank is India‟s largest private sector lender

by assets. It is the largest bank in India by market capitalization as of February 2016. It was

ranked 69th in 2016 BrandZ Top 100 Most Valuable Global Brands. The majority of customers

are satisfied. But the bank should target on the rest of the customers who are not satisfied. The

customers are aware about the bank‟s services but the Bank should try to create more awareness

among people. HDFC Bank should lay more stress on advertisements, both in print as well as in

other media for this purpose. Number of formalities should reduce, as customer feels irritated

with lots of formalities and it will save the time of customer and Bank also.

The study also comprise company image is the highly important criteria that consumers consider

before taking up a life insurance. This is mainly because people expect safety and secure for their

money which they invest, followed by the factor Premium which we pay to the insurer and then

Bonus and Interest paid by the company, services etc.

57
Recommendation

 More stress should give on the advertisement and promotional activities.

 The Bank should make some efforts to improving good relationship with customer.

 The bank should enhance their services according to the needs of the customer.

 The bank makes its procedures less time consuming.

 The bank should make effort to aware the customers about their all the extra services.

58
BIBLIOGRAPHY

 www.bnknetindia/com/banking/finance
 http://en.wikipedia.org/wiki/bankingfinancialcompany
 www.hdfcbank.com
 www.hdfcbank/products/finance
 www.iloveindia.com
 www.lifeinsuranceindia.com
 www.scribd.com
 www.irda.com

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