Portfolio Management Practices in HDFC Bank Essay

HDFC Bank Ltd is a major Indian financial services company based in Mumbai. The Bank is a publicly held jargoning company engaged in providing a wide regulate of banking and financial services including commercial banking and treasury operations. The Bank at read has an enviable network of 2201 break upes and 7110 ATMs spread in 996 cities across India. They also mystify one overseas wholesale banking branch in Bahrain, a branch in Hong Kong and two representative offices in UAE and Kenya. The Bank has two subordinate companies, namely HDFC Securities Ltd and HDB Financial Services Ltd. The Bank has three primary line segments, namely banking, wholesale banking and treasury.The Banks sh bes are listed on the Bombay investment trust step in Limited and The National Stock Exchange of India Ltd. The Banks American Depository Shares (ADS) are listed on the New York Stock Exchange (NYSE) and the Banks Global Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange. HDF C Bank Ltd Was incorporated on August 30, 1994 by lodgement Development Finance Corporation Ltd. In the year 1994, Housing Development Finance Corporation Ltd was amongst the first to receive an in tenet approval from the Reserve Bank of India to set up a bank in the unavowed sector, as part of the RBIs loosening of the Indian Banking Industry. HDFC Bank commenced operations as a Scheduled commercial message Bank in January 1995. In the year 1996, the Bank was appointed as the clearing bank by the NSCCL.In the year 2001, they became the first private sector bank to be authorized by the Central maturate of Direct Taxes (CBDT) as well as the RBI to accept contribute taxes. During the year, the Bank made a strategic tie-up with a Bangalore-based commerce solutions software developer, Tally Solutions Pvt Ltd for developing and offering products and services facilitating on-line method of accounting and banking services to SMEs. During the year 2001-02 the bank was listed on the New York Stock Exchange. In September 28, 2005, the Bank increased their stake in HDFC Securities Ltd from 29.5% to 55%. Consequently, HDFC Securities Ltd became a subsidiary of the Bank. During the year 2007-08, the Bank added 77 new branches take the nub to 761 branches.The art and science of making decisions approximately investment mix and policy, twin(a) investments to objectives, asset allocation for individuals and institutions, and balancing encounter against performance.Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered in the attempt to maximize harvest-feast at a given impulse for risk. The meaning of Portfolio Management is as follows * Portfolio is a collection of asset.* The asset whitethorn be physical or financial like share, Bonds, Debentures and Preference Shares and so on * The individual investor or fund fo ur-in-hand would not like to rear all his money in the shares of one company, for that would amount to great risk. * master(prenominal) objective is to maximize portfolio gift and at the same time minimizing the portfolio risk by diversification. * Portfolio management is the management of various financial assets, which comprise the portfolio. * accord to Securities Exchange Board of India Act 1993, Portfolio means the total holding of securities belong to any person. * Designing portfolios to suit investor requirement often involves making several(prenominal) projections regarding the future, based on the current information. * One of the key inputs in portfolio construct is the risk bearing ability of the investor. * Portfolios are built to suit the return expectations and the risk appetite of the investor.The Basic objective is to maximize yield and calumniate risk. The other objectives are as follows * Stability of Income An investor considers stability of income from his investment. He also considers the stability of purchasing power of income.* Capital Growth Capital perceptiveness has become an important investment principle. Investors seek growth declinations which provide a very large capital appreciation by way of rights, bounty and appreciation in the market price of the share.* Liquidity An investment is a liquid asset. It can be converted into cash with the help of stock exchange. The portfolio should contain a planned proportion of high grade and promptly salable investment.* Safety Safety means protection for investment against release under reasonably variations. In order to provide safety, a wide-awake review of economic and industry trends is necessary. In other words, errors in portfolio are unavoidable and it requires extensive diversification.* Tax Incentives Investors try to minimize their tax liabilities from the investments. The portfolio manager has to keep a list of such investment avenues along with the return risk, prof ile, tax implications, yields and other returns.