Merger

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4.0 HDFC BANK AND CENTURION BANK OF PUNJAB- A STUDY

The Housing Development Finance Corporation Limited (HDFC) was first to receive approval of Reserve Bank of India to set up a bank in the private sector in liberalized era in 1994. The Bank was incorporated in August 1994 in the name of ‘HDFC Bank Limited’ with its registered office in Mumbai, India. HDFC Bank commenced operations as Scheduled Commercial Bank in 1995. The mission of HDFC Bank is to become World-Class Indian Bank. The business philosophy of HDFC Bank is based on four core values- Operational Excellence, Customer Focus, Product Leadership and People. At present, HDFC Bank has vast network of 2150 branches spread in 1141 cities across India. All branches are linked on real time basis. The Bank also has 6838 networked ATMs across these cities. All the bank branches have online connectivity which enables the bank to offer speedy funds transfer facilities to its customers. Centurion Bank of Punjab Ltd. Was incorporated on 30th June 1994 and the certificate of Commencement of Business on July 20th 1994. It was promoted as a joint venture between 20th Century Finance Corporation Ltd and its Associates and Keppel Group of Singapore. In 1995, the Bank was set up in fully computerized environment with ATM facility at every branch and computer networking between branches. It claimed to ‘Bank with difference’. The Bank has for the first time in the country, the concept of ‘Anywhere Banking’ which enables to operate the account from any other branch of the Bank The amalgamation of the Centurion Bank of Punjab with HDFC Bank was done in May, 2008. HDFC bank was merged with Centurion Bank of Punjab with motive of expansion of size and benefits of scope economics. It was a voluntary merger. There was significant value addition of HDFC in terms of increase branch network, geographic reach, customer base and a bigger pool of skilled manpower. For HDFC Bank, this merger provided an opportunity to widen geographical and functional reach. Moreover, there was business synergy and cultural fit between the two organizations. For Centurion Bank of Punjab, HDFC Bank would exploit its underutilized branch network which had requisite expertise in retail banking and transaction banking. Productivity levels of CBOP branches would improve by leveraging HDFC’s brand name. The merger created an entity with an asset of Rs. 1,09,718 Crore (7th largest in India), providing massive scale economies and improved distribution with 1148 branches and ATMs (the largest in terms of branches in the private sector).

5.0 DATABASE & RESEARCH METHODOLOGY
The present study is secondary based. The data is mainly collected from various issues of Annual Reports of HDFC Bank. The study is done for 5 years that is from 2006-07 to 2010-11. The study period is divided into pre-merger and post-merger period. The pre-merger period is 2006-08 and post-merger period is 2009-2011. The year 2008-09 is base period because HDFC acquired CBOP in May, 2008. The broad hypothesis framed is that impact of merger on HDFC Bank is significant. For the purpose of study, the research instrument used is the CAMEL Model. It is the recent innovation for evaluating financial performance of banks. This model was adopted in India since 1995 at the suggestion of Mr. Padmanabhan, Governor RBI. Various ratios calculated under the Model help in identifying the strengths and weaknesses of banks and suggesting improvement in its future working. In the present study, following financial ratios under CAMEL Model have been used for the analysis of Financial Performance. Under this model, the rating of individual banks is done along five key parameters- Capital Adequacy, Asset Quality, Management Capability, Earnings Capacity and Liquidity. For the purpose of analysis of various ratios under CAMEL Model, statistical tools such as mean, standard deviation, coefficient of...
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