UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM20-F

OR

For the fiscal year ended March 31, 20142017

OR

For the transition period from to

OR

Date of event requiring this shell company report

Commission file number001-15216

HDFC BANK LIMITED

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

India

(Jurisdiction of incorporation or organization)

HDFC Bank House, Senapati Bapat Marg, Lower Parel, Mumbai 400013, India

(Address of principal executive offices)

Name: Sanjay Dongre, Executive Vice President (Legal) and Company Secretary

Telephone:91-22-2490-2934 /or91-22-2498-8484, Ext. 3473

Email:sanjay.dongre@hdfcbank.com

Address: 2nd floor, Process House, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013, India.

(Name, telephone,e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act:Not Applicable

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:Not Applicable

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Equity Shares, as of March 31, 2014             2,399,050,4352017            2,562,545,717

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x☒    No  ¨☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨☐    No  x☒

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒    No  ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x☒    No  ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a non-accelerated filer.an emerging growth company. See definition of “large accelerated filer,” “accelerated filerfiler” and large accelerated filer”“emerging growth company” inRule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ☒            Acceleratedxfiler  ☐            Non-accelerated Accelerated filer  ¨                Non-accelerated filer  ¨☐            Emerging growth company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:    Item 17  ¨☐    Item 18  ¨☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).    Yes  ¨☐    No  x

☒

TABLE OF CONTENTS

i

CROSS REFERENCE SHEET

Form20-F

ii

iii

EXCHANGE RATES AND CERTAIN DEFINED TERMS

In this document, all references to “we,” “us,” “our,” “HDFC Bank” or “the Bank” shall mean HDFC Bank Limited or where the context requires also to its subsidiaries whose financials are consolidated for accounting purposes. References to the “U.S.” or “United States” are to the United States of America, its territories and its possessions. References to “India” are to the Republic of India. References to the “Companies Act” in the document mean the Companies Act, 1956 (to the extent such enactment remains in force) and the Companies Act, 2013 (to the extent notified as of the date of this report) and all rules and regulations issued thereunder. References to “$” or “US$” or “dollars” or “U.S. dollars” are to the legal currency of the United States and references to “ Rs.“Rs.” or, “INR”, “rupees” or “INR” or “Indian rupees” are to the legal currency of India.

Our financial statements are presented in Indian rupees and in some cases translated into U.S. dollars. The financial statements and all other financial data included in this report, except as otherwise noted, are prepared in accordance with United States generally accepted accounting principles, or U.S. GAAP. USU.S. GAAP differs in certain material respects from accounting principles generally accepted in India, the requirements of India’s Banking Regulation Act and related regulations issued by the Reserve Bank of India (“RBI”)(RBI) (collectively, “Indian GAAP”)Indian GAAP), which form the basis of our statutory general purpose financial statements in India. Principal differences insofar as they relate to us include: determination of the allowance for credit losses, classification and valuation of investments, accounting for deferred income taxes, stock-based compensation, employee benefits, loan origination fees, derivative financial instruments, business combinations and the presentation format and disclosures of the financial statements and related notes.

References to a particular “fiscal” year are to our fiscal year ended March 31 of such year.

Fluctuations in the exchange rate between the Indian rupee and the U.S. dollar will affect the U.S. dollar equivalent of the Indian rupee price of the equity shares on the Indian stock exchanges and, as a result, will affect the market price of our American Depositary Shares (“ADSs”)(ADSs) in the United States. These fluctuations will also affect the conversion into U.S. dollars by the depositary of any cash dividends paid in Indian rupees on the equity shares represented by ADSs.

After the INR depreciated sharply in fiscal 2009 on account of the global risk aversion that resulted in a substantial reduction in capital flows, it managed to recover in fiscal 2010. The recovery in fiscal 2010 was driven by a pickup in domestic growth prospects that attracted foreign funds and improvement in global risk appetite. In fiscal 2011, the rupee was range bound as capital flows just about managed to balance the drag from external debt servicing and the current account deficit. However, in fiscal year 2012, the INRIndian rupee depreciated coming under pressure amidst a widening current account deficit, thin capital inflows and rising global uncertainty spurred by lingering financial and economic instability in Europe and the USA.United States. This trend continued in fiscal 2013. During fiscal 2014, the INRrupee came under immense and sustained selling pressure driven by growing anxiety about domestic growth prospects and global risk aversion. The rupee depreciated in fiscal 2014 by 10.1% compared to the U.S. dollar. Investor expectations that reforms implemented by India’s government will lead to an improvement in the long-term growth outlook helped to improve the rupee’s performance, reducing the depreciation trend to 3.85% in fiscal 2015. During fiscal 2016, the rupee depreciated by 6.32% primarily reflecting global risk aversion and a strong U.S. dollar. However, in line with other emerging markets, which experienced currency appreciation in fiscal 2017, the Indian rupee also appreciated by 2.1% against the U.S. dollar (the high and low during fiscal 20142017 were Rs. 68.86 per US$1.00 and Rs 64.85 per US$1.00, respectively). This was Rs. 68.80 per US$ and Rs. 53.65 per US$ respectively). In recent months, however, the INR has appreciated and been fairly stable against the US dollar on expectations that the formationmainly attributed to repricing of a new government with a very strong mandate could spur additional market reforms that might in turn help revive growth prospects in the Indian economy.

assets by international investors (driven by domestic economic and political stability) alongside the disappointment relating to the U.S. reform agenda. The following table sets forth, for the periods indicated, information concerning the exchange rates between Indian rupees and U.S. dollars based on the noon buying rate in The Citythe city of New York for cable transfers of Indian rupees as certified for customs purposes by the Federal Reserve Bank of New York:

The following table sets forth the high and low noon buying rate for the Indian rupee for each of the previous six months:

Although we have translated selected Indian rupee amounts in this document into U.S. dollars for convenience, this does not mean that the Indian rupee amounts referred to could have been, or could be, converted to U.S. dollars at any particular rate, the rates stated above, or at all. Unless otherwise stated, all translations from Indian rupees to U.S. dollars are based on the noon buying rate in the City of New York for cable transfers in Indian rupees at US$1.00 = Rs. 60.0064.85 on March 31, 2014.2017. The Federal Reserve Bank of New York certifies this rate for customs purposes on each date the rate is given. The noon buying rate on July 18, 201421, 2017 was Rs. 60.3364.38 per US$1.00.

FORWARD-LOOKING STATEMENTS

We have included statements in this report which contain words or phrases such as “will”, “aim”, “believe”, “expect”,“will,” “aim,” “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “future”, “objective”, “project”, “should”,likely result,” “believe,” “expect,” “will continue,” “anticipate,” “estimate,” “intend,” “plan,” “contemplate,” “seek to,” “future,” “objective,” “goal,” “project,” “should,” “will pursue” and similar expressions or variations of these expressions, that are “forward-looking statements”.statements.” Actual results may differ materially from those suggested by the forward-looking statements due to certain risks or uncertainties associated with our expectations with respect to, but not limited to, our ability to implement our strategy successfully, the market acceptance of and demand for various banking services, future levels of ournon-performing loans, our growth and expansion, the adequacy of our allowance for credit and investment losses, technological changes, volatility in investment income, our ability to market new products, cash flow projections, the outcome of any legal, tax or regulatory proceedings in India and in other jurisdictions we are or become a party to, any penalties imposed by the RBI, the future impact of new accounting standards, our ability to pay dividends, the impact of changes in banking regulations and other regulatory changes on us in India and other jurisdictions, on us, our ability to roll over our short-term funding sources and our exposure to market and operational risks. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what may actually occur in the future. As a result, actual future gains, losses or impact on net income could materially differ from those that have been estimated. Our forward looking statements speak only as of the date on which they are made and we do not undertake any obligation, and we do not intend, to update or revise any forward looking statements to reflect events or circumstances after the date in the statement, even if our expectations or any related events or circumstances change.

In addition, other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this document include, but are not limited to: general economic and political conditions, instability or uncertainty in India and the other countries which have an impact on our business activities or investments caused by any factor, including the global financial crisis and problems in the Eurozone countries, any downgrade in India’s debt rating or the debt rating of our borrowings, terrorist attacks in India, the United States or elsewhere, anti-terrorist or other attacks by the United States, a UnitedStates-led coalition or any other country, tensions between India and Pakistan related to the Kashmir region or between India and China, military armament or social unrest in any part of India,India; the monetary and interest rate policies of the governmentGovernment of India, natural calamities, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices,prices; the performance of the financial markets in India and globally, changes in Indian and foreign laws and regulations, including tax, accounting and banking regulations, changes in competition and the pricing environment in India, and regional or general changes in asset valuations. For further discussion on the factors that could cause actual results to differ, see “Risk Factors”“Risk Factors.”

BUSINESS

Overview

We are a new generation private sector bank in India. Our goal is to be the preferred provider of financial services to upper and middle income individuals and corporations in India.India across metro, urban, semi-urban and rural markets. Our strategy is to provide a comprehensive range of financial products and services to our customers through multiple distribution channels, with what we believe isare high quality service, advanced technology platforms and superior execution. We have three principal business activities: retail banking, wholesale banking and treasury operations.

We have grown rapidly since commencing operations in January 1995. In the five years ended March 31, 2014,2017, we expanded our operations from 1,4122,544 branches and 3,2958,913 Automated Teller Machines (ATMs)(“ATMs”) in 5281,399 cities/towns in 2012 to 3,4034,715 branches and 11,25612,260 ATMs in 2,1712,657 cities/towns.towns in 2017. During the same five yearfive-year period, our customer base increased from 18.325.9 million customers to 28.9over 40.5 million customers. On account of the expansion in our geographical reach and the resultant increase in market penetration, our assets have grown from Rs. 2,020.73,571.2 billion as of March 31, 20092012 to Rs. 5,125.49,067.0 billion as of March 31, 2014.2017. Our net income has increased from Rs. 15.149.8 billion for fiscal 20092012 to Rs. 79.3140.5 billion for fiscal 2014.2017.

Our financial condition and results of operations are affected by general economic conditions prevailing in India. The Indian economy underwent yet another challenging environment in 2013-14 driven by subdued domestic growth, extreme volatilityOver the last year, the government has taken some key policy decisions including the introduction of the long-awaited Goods and Services Tax (“GST”) Act and the more sweeping change in the exchange rateform of “demonetization” of high denomination notes of Rs.500 and a much higher thanRs. 1,000. While there are expected spike in inflation rates. While domesticlong-term gains of demonetization, short-term disruptions that the “cash squeeze” caused, weighed down on the economy. The GST Act was implemented with effect from July 1, 2017. Its implementation is expected to boost tax collections and positively impact India’s long-term growth potential.

Economic growth during fiscal 2017 has been fairly modest. As per the estimates of the Indian Central Statistics Office (“CSO”), real GDP growth did show a marginal improvement from 4.5% (YoY)moderated to 7.1% in fiscal 2013 to 4.7%2017 from 8.0% in fiscal 2014 (estimated), most2016. While the slowdown reflected the impact of demonetization, there was also an upward revision of the increase can be attributederstwhile reported growth for fiscal 2016 (from 7.6% earlier to an increasenow 8.0%). On the other hand, inflation was more moderate during fiscal 2017, with the average level of Consumer Price Inflation declining to 4.5% in agricultural growth from 1.4% to 4.2%. Growth in both the industrial sector and service sector remained lackluster due to weakness in both consumption and investment demand. A major problem for the economy in first half of fiscal 2014 was a very aggressive and disorderly bout of currency depreciation. The Indian rupee weakened to its lowest level against the US dollar driven by concerns about the domestic macroeconomic landscape that made investors somewhat circumspect of investing in domestic assets. However, the anxiety about the future direction of US monetary policy due to the U.S. Federal Reserve preparing the markets for a gradual wind-down of the third round of quantitative easing (QE 3) resulted in an overall outflow of funds from European markets. The Indian rupee also fell victim to this rotation of funds away from European markets and into US markets. To counter pressures of currency depreciation, the RBI in July 2014 introduced a series of emergency measures to tighten domestic liquidity in order to raise short-term rates to provide the Indian rupee with some yield advantage. These measures resulted in an inversion of the yield curve. The RBI also provided various incentives to commercial banks to raise foreign currency non-residents (FCNR) deposits which resulted in foreign currency flows of US$ 34 billion into the country. The RBI gradually removed these emergency measures when the exchange rate showed some signs of stability in second half of fiscal 2014. However, the RBI hiked the repo rate by approximately 75 bps over the course of fiscal 2014 in part to counter exchange rate depreciation as well as to fight inflation pressures as consumer price index (CPI) inflation touched a high 11.24% in November 2013.

However, in the fourth quarter of fiscal 2014 there were some signs of an improvement in the overall domestic macroeconomic landscape that in turn provided some stability to the Indian rupee. For one, inflation pressures subsided because of a reduction in food price inflation. The government appeared to have stuck to its promise of fiscal consolidation by reducing the fiscal deficit to GDP ratio2017 from 4.9% in fiscal 20132016. A range of supply side measures, including prudent food stock management, appropriate monetary policy action and subdued global commodity prices led to 4.6%the decline in inflation. The decline in domestic inflation allowed the RBI to cut its policy rate by 50 basis points over the year.

Investment in new capacity is likely to remain limited and confined primarily to the public sector. In this regard, sectors supported by the government in its fiscal 2018 Union Budget are likely to be the most visible drivers of the investment cycle. Meanwhile, given the excess capacity and significant debt overhang in the private corporate sector, the private capital expenditure cycle is likely to remain subdued in the near term before it starts to gradually recover in the medium term, anticipated to begin its recovery by the end of 2017.

However, subdued global growth and the rise in the call for protectionist policies across the world could prove to be an additional obstacle to domestic growth in 2017. Weak external demand coupled with an anticipation of higher commodity prices could therefore prove to be a risk for India’s exports in fiscal 2014. Lastly,2018. However, there has been a significantconsiderable improvement in the external vulnerability that is most visible in the fact that the current account deficit that has compressedshrunk from 4.8% of GDP in fiscal 2013 to a possible 1.9%0.7% of GDP in fiscal 2014. 2017.

The improvementgrowth inflation mix is expected to improve in fiscal 2018. According to the current account position can partiallyUnion Budget, the focus of fiscal policy in fiscal 2018 is expected to be attributed to a substantial compression in the trade deficit as imports fell by 6.7%. Going forward, the forecasts are based on expectations that the new government with a strong mandate could spur the reform process. This might in turn help revive growth prospects in the Indianrevival of India’s rural economy and that domesticthe sustained increase in capital expenditure. In addition, an increased investment in various social sector programs and the implementation of Seventh Central Pay Commission awards may boost consumer spending. The headline GDP growth couldis expected to increase to around 5.5%. However, downside risks remain primarily7.5% in fiscal 2018 from an unfavorable7.1% in fiscal 2017. In addition, with the likelihood of a normal monsoon season that could adversely affectand subdued global commodity prices, the agricultural sector and resultheadline inflation is likely to decline to an average level of 3.1% in a further escalation in food price inflation. fiscal 2018, opening up room for additional rate cuts by the RBI.

Notwithstanding ourthe pace of growth in India, we believe we have maintained a strong balance sheet and a low cost of funds. Current account and savings account deposit growth witnessed a strong increase during fiscal 2017 largely attributable to the demonetization exercise. Demonetization also led to a sharp increase in transactions onpoint-of-sale terminals during this period. As of March 31, 2014,2017, netnon-performing customer assets (which consist of loans and credit substitutes) constituted 0.6% of net customer assets. In addition, our net customer assets represented 88.6%98.4% of our customer deposits and customerour deposits represented 71.6%70.9% of our total liabilities and shareholders’ equity. The averagenon-interest bearing current accounts andlow-interest bearing savings accounts represented 42.1%40.8% of total deposits for fiscal 2014.the period ended March 31, 2017. Theselow-cost deposits and the cash float associated with our transactional services led to an average cost of funds including equity(including equity) for fiscal 20142017 of 5.1%4.6%.

We had a cash outflow of approximately Rs. 8.9 billion, Rs. 10.0 billion and Rs. 12.6 billion in fiscals 2015, 2016 and 2017, respectively, principally for property, plant and equipment, including our branch network expansion and our technology and communications infrastructure. We have budgeted for approximately Rs. 16.1 billion of aggregate capital expenditure in fiscal 2018. This amount includes Rs. 2.9 billion to expand our branch and ATM network, and Rs. 7 billion to upgrade and expand our hardware, data center, network and other systems. The balance will be primarily used to add new equipment in our existing premises, launch new currency chests, relocate our branches and back offices and renovate branches. We may use these budgeted amounts for other purposes depending on, among other factors, the business environment prevailing at the time. As a result, our actual capital expenditures may be higher or lower than the budgeted amounts.

HDFC Bank was incorporated in August 1994 and commenced operations as a scheduled commercial bank in January 1995. In 2000, we merged with Times Bank Limited and, in 2008, we acquired Centurion Bank of Punjab Limited (“CBoP”). We are part of the HDFC group of companies established by our principal shareholder, Housing Development Finance Corporation Limited (“HDFC Limited”), a listed public limited company established under the laws of India. HDFC Limited is primarily engaged in financial services, including mortgages, property-related lending and deposit services. The subsidiaries and associated companies of HDFC Limited are also largely engaged in a range of financial services, including asset management, life insurance and other insurance. HDFC Limited and its subsidiaries owned 22.6%21.2% of our outstanding equity shares as of March 31, 2014.2017. Our ChairmanChairperson and Managing Director wereare nominated by HDFC Limited and appointed with the approval of our shareholders and the Reserve Bank of India (RBI).RBI. In addition, Mr. Keki Mistry—Mistry, Vice Chairman and Chief Executive Officer of HDFC Limited, and Mrs. Renu Karnad–Karnad, Managing Director of HDFC Limited, are members of our Board of Directors.Directors and have been appointed independent of HDFC Limited’s entitlement to nominate two directors. See also “Principal Shareholders”the section “Principal Shareholders”. We have no agreements with HDFC Limited or any of its group companies that restrict us from competing with them.them or that restrict HDFC Limited or any of its group companies from competing with our business. We currently distribute products of HDFC Limited and its group companies, such as home loans of HDFC Limited, life and general insurance products of HDFC Standard Life Insurance Company Limited and HDFC ERGO General Insurance Company Limited, respectively, and mutual funds of HDFC Asset Management Company Limited.

We had a cash outflow of approximately Rs. 7.9 billion, Rs. 10.0 billion and Rs. 9.7 billion in fiscals 2012, 2013 and 2014, respectively, principally for property, plant and equipment, including our branch network expansion and our technology and communications infrastructure. We have current plans for aggregate capital expenditures of approximately Rs. 8.1 billion in fiscal 2015. This budgeted amount includes Rs. 2.5 billion to expand our branch and back office network, Rs. 0.1 billion to expand our electronic data capture terminal network and Rs. 3.1 billion to upgrade and expand our hardware, data center, network and other systems. We may use these budgeted amounts for other purposes depending on, among other factors the business environment prevailing at the time, consequently our actual capital expenditures may be higher or lower than our budgeted amounts.

We have two subsidiaries, as per local laws: HDFC Securities Limited (“HSL”) and HDB Financial Services Limited (“HDBFSL”). HSL is primarily in the business of providing brokerage and other investment services through the internet and other channels. HDBFSL is anon-deposit taking non-banknon-banking finance company (“NBFC”). We have engaged primarily in the business of retail asset financing. Until fiscal 2016, the Bank also consolidated the financial statements of Atlas Documentary Facilitators Company Private Ltd. (“ADFC”), which provides back office transaction processing services, and its subsidiary HBL Global Private Limited (“HBL“), which provides direct sales support for certain products of the Bank, in our U.S. GAAP financial statements. On December 1, 2016, ADFC and its subsidiary HBL amalgamated with HDBFSL.

Our principal corporate and registered office is located at HDFC Bank House, Senapati Bapat Marg, Lower Parel, Mumbai 400 013, India. Our telephone number is91-22-6652-1000. Our agent in the United States for the 2001, 2005, 2007 and 20072015 ADS offerings is Depositary Management Corporation, 570 Lexington Avenue, 44th Floor, New York, NY 10022.

Our Competitive Strengths

We attribute our growth and continuing success to the following competitive strengths:

Our use of technologyWe have a strong brand and extensive reach through a large distribution network

At HDFC Bank, we are focused on understanding our customers’ financial needs and providing them with relevant banking solutions. We continuedare driven by our core values—customer focus, operational excellence, product leadership, sustainability and people. This has helped us grow and achieve leadership while delivering value to make substantial investmentsour customers, stakeholders, employees and our community. We have aligned with the times in our technology platforms and systems and expand our electronically linked branch network. Our Bank’s direct banking platforms continue to be stable and robust, supporting ever increasing transaction volumes, as customers adopt newer self-service technologies.

We successfully upgraded our retail core banking system toleveraging the latest technology platform. Continuing withto offer all banking solutions through the program fromdigital platform of our customers’ choice. HDFC Bank is one of the previous fiscal year,most trusted and preferred bank brands in India. We have been acknowledged as “India’s Most Valuable Brand” by BrandZ for the third consecutive year.

We have capitalized on our Bank migrated the remaining retail accounts to this new technology platform during fiscal 2014. The new retail corestrong brand by establishing an extensive branch network throughout India serving a broad range of customers in urban, semi-urban and rural regions. As of March 31, 2017, we had 4,715 branches and 12,260 ATMs in 2,657 cities and towns and over 40 million customers. Our branch network is further complemented by our digital strategy, including online and mobile banking system, deployed on a more robust architecture, enabled the Banksolutions, to provide additional featuresour customers with access to its customerson-demand banking services, which we believe allows us to develop strong and respond faster to business and market needs.

We have implemented state-of-the-art engineered systems technology for some of the important systems. The capacity of the electronic funds transfer (EFT) switch has been upgraded to cater to growing ATM and other payment transaction volumes and enhance scalability. We have doubled the capacity ofloyal relationships with our operational customer relationship management system, by implementing the latest version of its database engine and have doubled the number of possible concurrent users.

Live switch-over and switch-back drills of major IT applications have successfully been completed, as part of our Bank’s Business Continuity and Disaster Recovery management strategy, thereby enhancing our Bank’s readiness in responding to emergency situations. These switch-over and switch-back drills have also been successfully completed for the new retail core banking system.customers.

We deliver high quality service with superior execution

We continued to improve on Service Quality (SQ) across various customer contact points, including retail branches, ATMs and phone banking. With a view to ensure comprehensive improvement, we have extended SQ initiatives to the back office support functions as well. Our SQ team’s responsibilities include workplace organization, lobby management, handling of complaints, turn-around times and compliance with the Bank’s internal processes as well as regulatory processes pertaining to customer service. The SQ team undertakes improvement projects at Retail branches using the Lean Sigma methodology for improving turn-around times, process re-engineering, first time right (FTR) for customer instructions/account opening forms, customer satisfaction improvement and cost reduction.

We have augmented training and skill development programs to enable and empower employees to deliver a higher quality of customer service. We have also integrated certain technology platforms to provide a seamless and smooth service experience to our customers, for example, the complaints management module has been integrated within the core Customer Relationship Management (CRM) system. Our focus on knowledgeable and personalized service, we believe, draws customers to our products and increases existing customer loyalty.

Many of our operational processes are certified under the International Organization for Standardization (ISO) 9001:2008. This certification requires the underlying processes to be robust, effective and efficient. The ISO certification ensures that: (a) we have a set of procedures that cover key processes; (b) our processes are monitored to ensure effectiveness with a focus on maximizing customer satisfaction; (c) adequate records are maintained and (d) outputs are monitored for any defects which provide triggers for continual improvement in service experience through root cause remediation.

We have taken various steps to improve the effectiveness of our grievance handling mechanism across our delivery channels. We periodically review the effectiveness of our overall customer service initiatives and grievance handling in particular at different levels within the Bank including at the Board level.

We offer a wide range of products and high quality service to our clients in order to servicemeet their banking needs

Whether in retail orbanking, wholesale banking or treasury operations, we consider ourselves a ‘one-stop shop’“one-stop shop” for our customers’ banking needs. This includes the services that we can provide to our customers, both directly and indirectly through the range of products we offer and back-office operational execution. We consider our high quality service to be a vital component of our business and believe in pursuing excellence in execution through multiple internal initiatives focused on continuous improvements to our operational execution. This pursuit of high quality service and operational execution directly supports our ability to offer a wide range of banking products. Our retail banking products range from retail loans to deposit products and other products and services, such as private banking, depositary accounts, foreign exchange services, distribution of third party products (such as insurance and mutual funds), bill payments and salesales of precious metals (such as gold and silver).silver bullion. In addition, we offer our customers brokingbrokerage accounts through our subsidiary HSL. On the wholesale banking side, we offer customers working capital loans, term loans, bill collections, investment banking services, letters of credit, and guarantees, and foreign exchange and derivative products. In addition weproducts and investment banking services. We also offer a range of deposit and transaction banking services such as cash management, custodial and clearing bank services and correspondent banking. We collect taxes for the government and are bankers to companies in respect of issuances of equity shares and bonds to the public by companies.public. We are able to provide this wide range of products across our branch network, meaning we can provide our targeted rural customers with banking products and services similar to those provided to our urban customers, which we believe gives us a competitive advantage. Our wide range of products createsand focus on superior service and execution also create multiple cross-selling opportunities for us and, we believe, improvespromote customer retention.

We have achieved robust and consistent financial performance while preserving asset quality during our growth

On account of our superior operational execution, broad range of products, expansion in our geographical reach and the resulting increase in market penetration through our extensive branch network, our assets have grown from Rs. 7,736.7 billion as of March 31, 2016 to Rs. 9,067.0 billion as of March 31, 2017. Our net income has increased from Rs. 117.9 billion for fiscal 2016 to Rs. 140.5 billion for fiscal 2017. In addition to the significant growth in our assets and net revenue, we remain focused on maintaining a high level of asset quality. Our grossnon-performingcustomer retention rates.assets as a percentage of total customer assets was 1.3% as of March 31, 2017 and our netnon-performing customer assets was 0.6% of net customer assets. Our net interest margin was stable at 4.6% in fiscals 2016 and 2017, net income as a percentage of average total shareholders’ equity was 14.4% in fiscal 2016 and 14.9% in fiscal 2017 and net income as a percentage of average total assets was 1.7% in fiscal 2016 and fiscal 2017. Our current and savings account deposits as a percentage of our total deposits were 48.0% as of March 31, 2017.

We have an advanced technology platform

We continue to make substantial investments in our advanced technology platform and systems and expand our electronically linked branch network. We have implemented mobile data based networking options in semi-urban and rural areas where telecom infrastructure and data connectivity are weak. These networks have enabled us to improve our core banking services in such areas and provide a link between our branches and data centers.

We are constantly working to develop new technology and improve the digital aspects of our business. Our focus remains on leveraging on the best of the digital technologies through our “Go Digital” initiative. Some major technological developments in the last two years include the introduction of our bilingual mobile banking application, Chillr, aperson-to-person smartphone payment solution, PayZapp with SmartBuy, a comprehensive and convenient secure payment system to improve oure-commerce processing capabilities, the creation of a virtual relationship manager for high net worth customers, and the introduction of Onchat on FB messenger for travel, entertainment and bill payments. We achieved a digital initiative milestone through the launch of “ten seconds personal loans” and “online loans against securities” to get what we view as “hassle free” liquidity from investments like shares and bonds. Furthermore, with the pilot launch of “IRA”, (Intelligent Robotic Assistant), an interactive humanoid placed in a branch to help in servicing, we set a benchmark for what we believe to be a best in class digital experience for customers.

We have a dedicated digital innovation team to research and experiment with technology, which hosts a Digital Innovation Summit annually to attract new talent and business opportunities from the financial technology space. In addition, we have developed robust data analytic capabilities that allow us to market and cross-sell our products to customers through both traditional relationship management and interactive,on-demand methods depending on how particular customers choose to interact with us.

We have also implementedstate-of-the-art engineered systems technology for some of the important backend operational systems, including doubling the capacity of our operational customer relationship management system. We believe that our direct banking platforms are stable and robust, enabling new ways to connect with our customers to cross-sell various products and improve customer retention.

We have an experienced management team

Many of the members of our senior management team have beenhad a long tenure with us, since our inception.which gives us a deep bench of experienced managers. They have substantial experience in banking across various countriesor other industries and share our common vision of excellence in execution. We believe thisHaving a management team with such breadth and depth of experience is well suited to leverage the competitive strengths we have already developed across our large, diverse and growing branch network as well as allowing our management team to createfocus on creating new opportunities for our business. See also “Management”the section “Management”.

Our Business Strategy

Our business strategy emphasizes the following elements:

Increase our market share of India’s expanding banking and financial services industry

In addition to benefiting from the overall growth in India’s economy and financial services industry, we believe we can increase our market share by continuing to focus on our competitive strengths. We also aim to increase geographicstrengths, including our strong HDFC Bank brand and market penetration by expanding our extensive branch and ATM networks, to increase our market penetration.

Increase our geographical reach

As of March 31, 2017, we had 4,715 branches, 12,260 ATMs in 2,657 cities and increasingtowns. We believe we can continue expanding our effortsbranch footprint, particularly by focusing on rural and semi-urban areas. We believe these areas represent a significant opportunity for our continued growth as we expand banking services to those areas which have traditionally been underserved and which, by entering such markets, will enable us to establish new customer bases. We also believe that delivering banking services which are integrated with our existing business and product groups helps us to provide viable opportunities to the sections of the rural and semi-urban customer base that is consistent with our targeted customer profile throughout India.

Cross-sell our broad financial product portfolio across our customer base

We are able to offer our complete suite of financial products across our branch network, including in our rural locations. By matching our broad customer base with our ability to offer our complete suite of products to both rural and urban customers across the retail banking, wholesale banking and treasury product lines, we believe that we can continue to generate organic growth by cross-selling different products by proactively offering our customers complementary products as their relationships with us develop and their financial needs grow and evolve.

Continue our investments in technology to support our digital strategy

We believe the increased availability of internet access and broadband connectivity across India requires a comprehensive digital strategy to proactively develop new methods of reaching our customers. As a result, we are continuously investing in technology as a means of improving our customers’ banking experience, offering them a range of products tailored to their financial needs and making it easier for them to interact with their banking accounts with us. We believe our culture of innovation and development to be crucial to remaining competitive. As part of our dedication to digitization and technological development, we have appointed a digital innovation team to research, develop and experiment with new technologies, and, in February 2017, we hosted our second annual Digital Innovation Summit to tap into emerging technological trends that are shaping the financial technology space.

While we currently provide a range of options for customers to access their accounts, including net banking, telephone banking, and banking applications on mobile devices, we believe additional investments in our technology infrastructure to further develop our digital strategy will allow us to cross-sell a wider range of products on our products.digital platform in response to our customers’ needs and thereby expand our relationship with our customers across a range of customer segments. We believe a comprehensive digital strategy will provide benefits in developing long-term customer relationships by allowing customers to interact with us and access their accounts wherever and whenever they desire.

Maintain strong asset quality through disciplined credit risk management

We have maintained high quality loan and investment portfolios through careful targeting of our customer base, and by putting in place what we believe are comprehensive risk assessment processes and diligent risk monitoring and remediation procedures. Our ratio of grossnon-performing customer assets toas a percentage of total customer gross assets was 1.2%1.3% as of March 31, 20142017 and our netnon-performing customer assets amounted to 0.6%as a percentage of net customer assets. In addition, we have restructured the payment termsassets was 0.6% as of certain loans.March 31, 2017. As of March 31, 2014, these represented 0.1% of2017, our gross customer assets.restructured loans as a percentage of grossnon-performing loans were 3.7%. We believe we can maintain strong asset quality appropriate to the loan portfolio composition while achieving growth.

Maintain a low cost of funds

We believe we can maintain a relativelylow-cost funding base as compared to our competitors, by leveraging on our strengths and expanding our base of retail savings and current deposits and increasing the free float generated by transaction services, such as cash management and stock exchange clearing. During fiscal 2014, ourOur average cost of funds (including equity) was 5.1%.

Focus on high earnings growth with low volatility

Our net income has grown at a compounded average rate of 39.3% during4.9% for fiscal 2016 and 4.6% for the five-year period ended March 31, 2014. We intend to maintain our focus on steady earnings growth through conservative risk management techniques and low-cost funding. In addition, we aim not to rely heavily on volatile streams of income such as those from trading and other big ticket fees (such as those from investment banking) so as to maintain earnings growth.fiscal 2017.

Our Principal Business Activities

Our principal business activities consist of retail banking, wholesale banking and treasury operations. The following table sets forth our net revenues attributable to each area for the last three years.years:

Retail Banking

Overview

We consider ourselves aone-stop shop for the financial needs of upper and middle income individuals. We provide a comprehensive range of financial products including deposit products, loans, credit cards, debit cards, third-party mutual funds and insurance products, investment advice, bill payment services and other services. Our retail banking loan products include loans to small and medium enterprises for commercial vehicles, construction equipment and other business purposes, which together account for more than a third of our total retail banking loans. We group these loans as part of our retail banking business considering, among other things, the customer profile, the nature of the product, the differing risks and returns, our organization structure and our internal business reporting mechanism. Such grouping ensures optimum utilization and deployment of specialized resources in our retail banking business. We also have specific products designed for lower income individuals through our Sustainable Livelihood Initiative (“SLI”). Through this initiative, we reach out to theun-banked and under-banked segments of the Indian population.

We actively market our services aggressively through our branches and alternate sales channels, as well as through our relationships with automobile dealers and corporate clients. We seekfollow a multi-channel strategy to establishreach out to our customers bringing to them choice, convenience and what we believe to be a relationship withsuperior experience. Innovation has been the springboard of growth in this segment and so has a retail customerstrong focus on analytics and then expand it by offering more products. As part of our growth strategy we continue to expand our distribution channels so as to make it easier forCustomer Relationship Management (CRM) which has helped the Bank know the customer better and offer tailor-made solutions. This leads to do business with us. We believe this strategy, together with the general growth of the Indian economy and the Indian upper and middle classes, affords us significant opportunities for growth.deeper customer engagement in a cost effective manner.

As of March 31, 2014,2017, we had 3,4034,715 branches and 11,25612,260 ATMs in 2,171 cities/2,657 cities and towns. We also provide telephone banking, internet and mobile banking to our customers. We plan to continue to expand our branch and ATM network as well as our other distribution channels, subject to regulatory guidelines/approvals.

Retail Loans and Other Asset Products

We offer a wide range of retail loans, including loans for the purchase of automobiles, personal loans, retail business banking loans, loans for the purchase of commercial vehicles and construction equipment finance,two-wheeler loans, credit cards and loans against securities. Our retail loans were 67.8 %67.6% of our gross loans of which 18.2%23.7% were unsecured as of March 31, 2014.2017. Apart from our branches, we use our ATM screensATMs and the internet to promote our loan products and we employ additional sales methods depending on the type of products. We perform our own credit analysesanalysis of the borrowers and the value of the collateral.collateral if the loan is secured. See “—Risk Management—Management—Credit Risk—Retail Credit Risk”Risk”. We also buy mortgage and other asset-backed securities and invest in retail loan portfolios through assignments. In addition to taking collateral, in manymost cases, we generally obtain debit instructions / post-dated checks covering all paymentsrepayments at the time a retail loan is made. It is a criminal offenceoffense in India to issue a bad check. We also sometimes obtain instructions to debit the customer’s account directly for making of payments. However,Our unsecured personal loans, which are stillnot supported by any collateral, are a greater credit risk for us than our secured loan portfolio because they are not supported by any collateral.portfolio. We may be unable to collect in part or at all on an unsecured personal loan in the event ofnon-payment by the borrower. Accordingly, personal loans are granted at a higher loan yieldcontracted interest rate since they carry a higher credit risk as compared to secured loans. Also see “Risk Factors—Our unsecured loan portfolio is not supported by any collateral that could help ensure repayment of the loan, and in the event ofnon-payment by a borrower of one of these loans, we may be unable to collect the unpaid balancebalance”.”.

The following table shows the gross book value and share of our retail credit products:

Auto Loans

We offer loans at fixed interest rates for financing new and used automobile purchases. In addition to our general marketing efforts for retail loans, we market this product through our relationships with car dealers, direct sales agents, corporate packages and joint promotion programs with automobile manufacturers. We believe that we are a leader in the auto loans segment.

Personal Loans /and Credit Cards

We offer unsecured personal loans at fixed rates to specific customer segments, including salaried individuals and self-employed professionals. In addition, we offer unsecured personal loans to small businesses and individual businessmen.

We also offer credit cards from the VISA, MasterCard and MasterCard stable,Diners platform, including gold, silver, corporate, business, platinum, titanium, signature, world, black, infinite, regalia, superiacredit cards under the classification of corporate cards, business cards,co-brand cards, premium retail cards and world creditsuper premium retail cards. During fiscal 2014,2017, the Bank launched three premium variantsproduct variants—Regalia First Credit Card, Freedom Credit Card and the Bharat Cashback Credit Card. The Bharat Cashback credit card specifically caters to the emerging markets. The launch of credit cards under the Diners brand under an exclusive arrangement with Diners. This willRegalia First is to enable the Bankbank to cater to the specific needs of super-premium customers requiring global card benefits.the rapidly growing super premium customer segment and the Freedom Credit Card caters to the youth segment of the country with an offering that meets their needs. We had approximately 5.17.3 million and 8.5 million cards outstanding as of March 31, 2014, as against 6.4 million as of2016 and March 31, 2013 as a result of rationalization exercise of the bank to identify and eliminate inactive cards and focus more on card activation.2017, respectively.

Retail Business Banking

We address the borrowing needs of the community of small businessmen primarily located near our bank branches by offering facilities such as credit lines, term loans for expansion or addition of facilities and discounting of receivables. We classify these business banking loans as a retail product. Such lending is typically secured with current assets as well as immovable property and fixed assets in some cases. We also offer letters of credit, guarantees and other basic trade finance products, foreign exchange and cash management services to such businesses.

Commercial Vehicles and Construction Equipment Finance

We provide secured financing for commercial vehicles and provide working capital, bank guarantees and trade advances to transport operators. In addition to funding domestic assets, we also finance imported assets for which we open foreign letters of credit and offer treasury services, such as forward exchange covers. We coordinate with manufacturers to jointly promote our financing options to their clients. We have a strong market presence in the commercial vehicle financing business.

Housing Loans

We provide home loans through an arrangement with our principal shareholder HDFC Limited. Under this arrangement, we sellsource loans provided byfor HDFC Limited through our branches. HDFC Limited approves and disburses the loans, which are kept on in their books, and we receive a sourcing fee for these loans. We have an option, but not an obligation, to purchase up to 70% (or 55% in case all the loans purchased qualified for priority sector lending) of the fully disbursed home loans sourced under this arrangement through either the issue of mortgage backedmortgage-backed pass through certificates (“PTCs”) or a direct assignment of the loans. The balance will beis retained by HDFC Limited.

Other Retail Loans

Two-Wheeler Loans

We offer loans for financing the purchase of scooters and motorcycles. We market this product in ways similar to our marketing of auto loans.

Loans Against Securities

We offer loans against equity shares, mutual fund units, bonds issued by the RBI and other securities that are on our approved list. We limit our loans against equity shares to Rs. 2.0 million per retail customer in line with regulatory guidelines and limit the amount of our total exposure secured by particular securities. We lend only against shares in book-entry (dematerialized) form, which ensures that we obtain perfected and first-priority security interests. The minimum margin for lending against shares is prescribed by the RBI.

We also offer loans which primarily include overdrafts against time deposits, health care equipment financing loans, tractor loans, loans against gold and ornaments, loans to self-help groups and small loans to farmers.

Mortgage-backed Securities

We also invest in mortgage-backed securities of other originators. These mortgages are generally in India. Most of these securities also qualify towards our directed lending obligations.

After our acquisition of Centurion Bank of Punjab Limited (CBoP) in 2008, the portfolio of home loans of CBoP was transferred to our loan book.

Asset-backed Securities

We invest in auto loans, two-wheeler loans, commercial vehicle loans and other asset-backed securities, represented by PTCs. These securities are normally credit-enhanced and may qualify for our directed lending requirements. These assets are generally in India.

Loan Assignments

We purchase loan portfolios, generally in India, from other banks, financial institutions and financial companies, which are similar to asset-backed securities, except that such loans are not represented by PTCs. Some of these loans also qualify toward our directed lending obligations.

Kisan Gold Card (“Agri Loans”)

Under the Kisan Gold Card, funds are extended to farmers in accordance with the RBI’s Kisan Credit Card (“KCC”) scheme in order to assist the farmers in financing certain farming expenses, such as the production of crops, post-harvest repair and maintenance and the domestic consumption needs of the farmers. The amount of funding available is based on the farmer’s cropping pattern, the amount of land under utilization and the scale of financing and asset costs. The Bank offers both cash credit and term loan facilities under this product.

Loans Against Gold Jewelry

We offer loans against gold jewelry to specific customer segments, including women and farmers. Such loans are included withinoffered with monthly interest payments and a bullet maturity. These loans also have margin requirements in the categories described above based on underlying exposures.

Sale/Transferevent of Receivablesa decrease in the value of the gold collateral due to fluctuations in market prices of gold. Loans against gold jewelry are also extended to existing auto loan, personal loan or home loan customers in order to cater to their additional funding needs.

We also securitize our retail loan receivables through independent special purpose entities (SPEs). The securities issuedoffer loans which primarily include overdrafts against these assets by the SPE are ratedtime deposits, health care equipment financing loans, tractor loans and normally credit-enhanced. Recourse is in the form of our investment in subordinated securities issued by SPEs, cash collateral and other credit and liquidity enhancementsloans to the extent stipulated by the rating agency. The Bank also may sell its loan receivables through loan assignments to other banks, financial institutions and financial companies. These are similar to asset-backed securities, except that such loans are not represented by PTCs and since May 2012, these transactions are also not credit enhanced.self-help groups.

In fiscal years 2013 and 2014, we did not sell any performing loans either through loan assignments or PTCs.

Sustainable Livelihood Initiative (SLI)

Our SLI targets lower income individuals to finance their economic activity, and also provide skill training, credit counseling, and market linkages for better price discovery. Through this initiative we reach out to the un-banked and under-banked segments of the Indian population.

Retail Deposit Products

Retail deposits provide us with a low cost, stable funding base and have been a key focus area for us since commencing operations. Retail deposits represented approximately 78.2%79.4% of our total deposits as of March 31, 2014.2017. The following chart shows the number of accounts andbook value of our retail deposits by our various deposit products:

Our individual retail account holders have access to the benefits of a wide range of direct banking services, including debit and ATM cards, access to internet and phone banking services, access to our growing branch and ATM network, access to our other distribution channels and eligibility for utility bill payments and other services. Our retail deposit products include the following:

We also offer special value-added accounts, which offer our customers added value and convenience. These include a time deposit account that allows for automatic transfers from a time deposit account to a savings account, as well as a time deposit account with an automatic overdraft facility.

We had mobilized US $ 3.4 billion in special Foreign CurrencyNon-Resident (FCNR) deposits from NRI clients under the RBI swap window in fiscal 2014. A major portion of these deposits were issued for a3-year tenor. These came up for redemption during fiscal 2017 and US $ 3.0 billion of the FCNR deposits were repaid.

Other Retail Services and Products

Debit Cards

We had around 17.423.0 million and 23.6 million debit cards outstanding as of March 31, 2014 as compared to 15.8 million as of2016 and March 31, 2013.2017, respectively. The cards can be used at ATMs andpoint-of-sales terminals in India and in other countries across the world.

Individual Depositary Accounts

We provide depositary accounts to individual retail customers for holding debt and equity instruments. Securities traded on the Indian exchanges are generally not held through a broker’s account or in a street name. Instead, an individual has his or her own account with a depositary participant. Depositary participants, including us, provide services through the major depositaries established by the two major stock exchanges. Depositary participants record ownership details and effectuate transfers in book-entry form on behalf of the buyers and sellers of securities. We provide a complete package of services, including account opening, registration of transfers and other transactions and information reporting.

Mutual Fund Sales

We offer our retail customers units in most of the large and reputable mutual funds in India. In some cases, we earnfront-end commissions for new sales and additional fees in subsequent years. We distribute mutual fund products primarily through our branches and our private banking advisors.

Insurance

We have arrangements with HDFC Standard Life Insurance Company Limited and HDFC ERGO General Insurance Company Limited to distribute their life insurance and general insurance products, respectively, to our customers. We earn upfront commissions on new premiums collected as well as some trailing income in subsequent years in somecertain cases while the policy is still in force.

Precious Metals

We import gold Our commission income for fiscal 2017 includes fees of Rs. 7,983.5 million in respect of life insurance business and silver bars for sale to our retail customers through our branch network.Rs. 1,575.8 million in respect of general insurance business.

Investment Advice

We offer our customers a broad range of investment advice, including advice regarding the purchase of Indian debt, equity shares and mutual funds. We provide our high net worth private banking customers with a personal investment advisor who can consult with them on their individual investment needs. We have also created a virtual relationship manager for our high net worth customers, which is available at any time through a secure video interface.

Bill Payment Services

We offer our customers utility bill payment services for leading utility companies, including electricity, telephone and internet service providers. Customers can also review and access their bill details through our direct banking channels. We believe this is a valuable convenience that we offer our customers. We offer these services to customers through multiple distribution channels—ATMs, telephone banking, internet banking and mobile telephone banking.

Corporate Salary Accounts

We offer Corporate Salary Accounts, which allow employers to make salary payments to a group of employees with a single transfer. We then transfer the funds into the employees’ individual accounts and offer them preferred services, such as lower minimum balance requirements. As of March 31, 2014,2017, these accounts constituted approximately 44% of our total retail savings accounts by number and approximately 29% of our retail savings deposits by value.

Non-Resident Indian Services

Non-resident Indians are an important target market segment for us given their relative affluence and strong ties with family members in India. Ournon-resident deposits amounted to Rs. 576.7Rs 728.6 billion as of March 31, 2014. As an accelerated measure to increase foreign currency inflows into the country, the RBI had, in the second half of fiscal 2014, permitted banks in India to raise foreign currency non-resident (FCNR) deposits within a specified time period and in turn swap them into rupees with the RBI at concessional rates. Our time deposits accordingly include US$ 3.4 billion deposits raised by us under the RBI window for FCNR deposits.2017.

Retail Foreign Exchange

We purchase foreign currency from and sell foreign currency to retail customers in the form of cash, traveler’s checks, demand drafts, foreign exchange cards and other remittances. We also carry out foreign currency check collections.

Customers and Marketing

Our target market for our retail services is comprised of upper and middle income individuals and high net worth customers. As of March 31, 2014,2017, around 14%28% of our retail deposit customers contributed approximately 77%81% of our retail deposits. These deposits include the time deposits raised by us under the RBI window for FCNR deposits. We market our products through our branches, online through our website, through telemarketing and athrough our dedicated sales staffteam for niche market segments. We also use third-party agents and direct sales associates to market certain products and to identify prospective new customers.

Additionally, we obtain new customers through joint marketing efforts with our wholesale banking department, such as our Corporate Salary Account package. Wepackage and we cross-sell many of ourseveral retail products to our customers. We also market our auto loan andtwo-wheeler loan products through joint efforts with relevant manufacturers and distributors.

We have programs that target other particular segments of the retail market. For example, our private and preferred banking programs provide customized financial planning to high net worth individuals in order to preserve and enhance their wealth.individuals. Private banking customers receive a personal investment advisor who serves as their single-point contact and compiles personalized portfolio tracking products, including mutual fund and equity tracking statements. Our private banking program also offers equity investment advisory products. While not as service-intensive as our private banking program, preferred banking offers similar services to a slightly broader target segment. Top revenue-generating customers of our preferred banking program are channeled into our private banking program.

We also have a strong commitment to financial inclusion programs to extend banking services to underserved populations. Our SLI targets lower income individuals to finance their economic activity, and also provide skill training, credit counseling, and market linkages for better price discovery. Through this initiative we reach out to theun-banked and under-banked segments of the Indian population.

Wholesale Banking

Overview

We provide our corporate and institutional clients a wide array of commercial banking products and transactional services.

Our principal commercial banking products include a range of financing products, documentary credits (primarily letters of credit) and bank guarantees, foreign exchange and derivative products, investment banking services and corporate deposit products. Our financing products include loans, overdrafts, bill discounting and credit substitutes, such as commercial papers, debentures, preference shares and other funded products. Our foreign exchange and derivatives products assist corporations in managing their currency and interest rate exposures.

For our commercial banking products, our customers include companies that are part of private sector business houses, public sector enterprises and multinational corporations, as well as small andmid-sized businesses. Our customers also include suppliers and distributors of corporations to whom we provide credit facilities and with whom we thereby establish relationships as part of a supply chain initiative for both our commercial banking products and transactional services. We aim to provide our corporate customers with high quality customized service. We have relationship managers who focus on particular clients and who work with teams that specialize in providing specific products and services, such as cash management and treasury advisory services.

Loans to small and medium enterprises, which are generally in the nature of loans for commercial vehicles, construction equipment and business purposes, are included as part of our retail banking business. We group these loans as part of our retail banking business considering, among other things, the customer profile, the nature of the product, the differing risks and returns, our organization structure and our internal business reporting mechanism. Such grouping ensures optimum utilization and deployment of specialized resources in our retail banking business.

Our principal transactional services include cash management services, capital markets transactional services and correspondent banking services. We provide physical and electronic payment and collection mechanisms to a range of corporations, financial institutions and government entities. Our capital markets transactional services include custodial services for mutual funds and clearing bank services for the major Indian stock exchanges and commodity exchanges. In addition, we provide correspondent banking services, including cash management services and funds transfers, to foreign banks andco-operative banks.

Commercial Banking Products

Commercial Loan Products and Credit Substitutes

Our principal financing products are working capital facilities and term loans. Working capital facilities primarily consist of cash credit facilities and bill discounting. Cash credit facilities are revolving credits provided to our customers that are secured by working capital such as inventory and accounts receivable. Bill discounting consists of short-term loans which are secured by bills of exchange that have been accepted by our customers or drawn on another bank. In many cases, we provide a package of working capital financing that may consist of loans and a cash credit facility as well as documentary credits or bank guarantees. Term loans consist of short-term loans and medium-term loans which are typically loans of up to five years in duration. ApproximatelyOver 90% of our loans are denominated in rupees with the balance being denominated in various foreign currencies, principally the U.S. dollar.

We also purchase credit substitutes, which are typically comprised of commercial paper and debentures issued by the same customers with whom we have a lending relationship in our wholesale banking business. Investment decisions for credit substitute securities are subject to the same credit approval processes as loans, and we bear the same customer risk as we do for loans extended to these customers. Additionally, the yield and maturity terms are generally directly negotiated by us with the issuer.

The following table sets forth the asset allocation of our commercial loans and financing products by asset type. For accounting purposes, we classify commercial paper and debentures as credit substitutes (which in turn are classified as investments).

While we generally lend on a cash-flow basis, we also require collateral from a large number of our borrowers. As of March 31, 2014,2017, approximately 70.7%71.1% of the aggregate principal amount of our gross wholesale loans was secured by collateral (approximately Rs. 304.9561.5 billion in aggregate principal amount of loans were unsecured). However, collateral securing each individual loan may not be adequate in relation to the value of the loan. All borrowers must meet our internal credit assessment procedures, regardless of whether the loan is secured. See “—Risk Management—Credit Risk—Wholesale Credit Risk”Risk”.

We price our loans based on a combination of our own cost of funds, market rates, tenor of the loan, our rating of the customer and the overall revenues from the customer. An individual loan is priced on a fixed or floating rate and the pricing is based on a margin that depends on the credit assessment of the borrower. We are required to follow the Base Rate Systemmarginal cost of funds based lending rate system while pricing our loans. For a detailed discussion of these requirements, see “Supervision“Supervision and Regulation—Regulations Relating to Making Loans”Loans”.

The RBI requires banks to lend to specific sectors of the economy. For a detailed discussion of these requirements, see “Supervision“Supervision and Regulation—Regulations Relating to Making Loans—Directed Lending”Lending”.

Bill Collection, Documentary Credits and Bank Guarantees

We provide bill collection, documentary credit facilities and bank guarantees for our corporate customers. Documentary credits and bank guarantees are typically provided on a revolving basis. The following table sets forth, for the periods indicated, the value of transactions processed with respect to our bill collection, documentary credits and bank guarantees:

Bill collection: We provide bill collection services for our corporate clients in which we collect bills on behalf of a corporate client from the bank of our client’s customer. We do not advance funds to our client until receipt of payment.

Documentary credits: We issue documentary credit facilities on behalf of our customers for trade financing, sourcing of raw materials and capital equipment purchases.

Bank guarantees: We provide bank guarantees on behalf of our customers to guarantee their payment or performance obligations. A small part of our guarantee portfolio consists of margin guarantees to brokers issued in favor of stock exchanges.

Foreign Exchange and Derivatives

Our foreign exchange and derivative product offering to our customers covers a range of products, including foreign exchange and interest rate transactions and hedging solutions, such as spot and forward foreign exchange contracts, forward rate agreements, currency swaps, currency options and interest rate derivatives. These transactions enable our customers to transfer, modify or reduce their foreign exchange and interest rate risks. A specified group of relationship managers from our treasury front office works on such product offerings jointly with the relationship managers from Wholesale Banking.

Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to exchange cash flows by way of interest in one currency against another currency and exchange of principal amounts at maturity based on predetermined rates. Rupee interest rate swaps are commitments to exchange fixed and floating rate cash flows in rupees. A forward rate agreement gives the buyer the ability to determine the underlying rate of interest for a specified period commencing on a specified future date (the settlement date) when the settlement amount is determined being the difference between the contracted rate and the market rate on the settlement date. Currency options give the buyer the right, but not an obligation, to buy or sell specified amounts of currency at agreed rates of exchange on or before a specified future date.

We enter into forward exchange contracts, currency options, forward rate agreements, currency swaps and rupee interest rate swaps with our customers, similar to our transactions with inter-bank participants. To support our clients’ activities, we are an active participant in the Indian inter-bank foreign exchange market. We also trade, to a more limited extent, for our own account. We also engage in proprietary trades of interest rate swaps and use them as part of our asset liability management.

The following table presents the aggregate notional principal amounts of our outstanding foreign exchange and derivative contracts with our customers as of March 31, 2012, 20132015, 2016 and 2014,2017, together with the fair values on each reporting date.

Investment bankingBanking

Our Investment Banking Group offers services in the debt and equity capital markets. The group has arranged project financing for clients across various sectors including telecom, toll roads, steel,healthcare, energy, chemicalsreal estate and cement. The group closedadvised on aggregate issuances of over Rs. 100640 billion worth of corporate bonds across public sector undertakings, financial institutions and the Bank’s corporate clients of the bank during fiscal 2014. In2017, becoming the advisory business,second largest corporate bond arranger in the Bank advised and closed transactions in capital goods, agrochemicals and the banking, financial services and insurance (BFSI) sector.market for fiscal 2017. In the equity capital markets business, the group has advised clients onconcluded the initial public offerings of a bank, a retail chain and buy-back of shares.

Precious Metals

Wea building product solution during fiscal year 2017. In the advisory business, we are advising clients in the business of importing bullion to leverage our distributioninfrastructure, financial services, industrials and servicing strengths and cater to the domestic and export bullion and jeweller segment. We generally import bullion on consignment basis and sell the same either on outright basis or by offering gold metal loan to our customers.healthcare sectors.

Wholesale Deposit Products

As of March 31, 2014,2017, we had wholesale deposits aggregating over Rs. 801.81,327.2 billion, which represented 21.8%20.6% of our total deposits. We offer bothnon-interest bearing current accounts and time deposits. We are allowed to vary the interest rates on our wholesale deposits based on the size of the deposit (for deposits greater than Rs. 10.0 million) so long as, provided the rates booked on a day are the same for all customers of that deposit size for that maturity. See “Selected“Selected Statistical Information”Information” for further information about our total deposits.

Transactional Services

Cash Management Services

We providebelieve that the Indian market is one of the most promising Cash Management Services (CMS) markets. However, it is also marked by some distinctive characteristics and challenges such as—a vast geography, a large number of small business-intensive towns, a large unorganized sector in various business supply chains, and infrastructural limitations for accessibility to many parts of the country. Over the years, such challenges have made it a daunting task for CMS providers in the country to uncover the business potential and extend suitable services and product solutions to the business community.

We have been providing CMS for the last two decades to our customers from diverse industry segments namely the FMCG, manufacturing, cement, automobile, services, financial institutions, NBFCs, banks, small & medium enterprise, stock exchange, mutual funds and retail segments.

We believe that our bank has been consistently aligning its product and services strategy to meet the customer needs. This has helped to keep ahead of competitors and retain a satisfied customer base that is growing by the year. Customer focus is upheld by continuous innovation in product features and servicing, which in turn has been built by a very effective synergy between technology, operational excellence and customer experience management.

We offer traditional and new age electronic banking products and experience an increasing demand for electronic banking services .While we believe that we have been able to maintain leadership position in the traditional CMS market, we believe that we have also been able to forge leadership position in the new age CMS market,i.e. electronic cash management services in India. Our services make it easier for our corporate customers to expedite inter-city check collections, make payments to their suppliers more efficiently, optimize liquidity and reduce interest costs. management. As of the date hereof, approximately 70% of the bank’s transactions are done on the Electronic platform.

In addition, to benefiting from the cash float, which reduces our overall cost of funds, we may also earn commissions for these services.

Our primary cash management service is check collection and payment. Through our electronically linked branch network, correspondent bank arrangements and centralized processing, we can effectively provide nationwide collection and disbursement systems for our corporate clients. This is especially important because there is no nationwide payment system in India, and checks must generally be returned to the city from which written, in order to be cleared. Because of mail delivery delays and the variations in city-based inter-bank clearing practices, check collections can be slow and unpredictable, and can lead to uncertainty and inefficiencies in cash management. We believe, we have aligned our product offering with changing and dynamic customer needs. Our focus on offering host to host integration with customers’ ERP/ SAP systems has helped create customer stickiness. Today we believe that we are a strong position in this area relativeleading service provider of electronic banking products with a large share of business across customer segments. We have, thus, been able to most other participants in this market.

Our wholesale banking clients also usereduce our cash management services. These clients include Indian private sector companies, public sector undertakingstransaction costs while maintaining our fees and multinational companies. We also provide these services to Indian insurance companies, mutual funds, brokers, financial institutions and various government entities.float levels.

We have also implemented a straight-through processing solution to link our wholesale banking and retail banking systems. This has led to reduced manual intervention in transferring funds between the corporate accounts which are in the wholesale banking system and beneficiary accounts residing in retail banking systems. This initiative helps reduce transaction costs. We have a large number of commercial clients using our corporate Internetinternet banking for financial transactions with their vendors, dealers and employees who bank with us.

In 2005, the RBI introduced an inter-bank settlement system called the Real Time Gross Settlement (RTGS) system. The RTGS system facilitates real time settlements primarily between banks and therefore could have an adverse impact on our cash management services. However, we believe our cash management services offer certain advantages not present in RTGS, including the provision of greater information to our clients regarding the source and identity of payments. In addition, through our cash management services our clients receive checks from their customers, which we believe many of our clients prefer because the issuance of a bad check is a criminal offense in India. See “Risk Factors—Risks Relating to Our Business—The development of a well entrenched nationwide inter-bank settlement system would adversely impact our cash float and decrease fees we receive in connection with check collection”.

Clearing Bank Services for Stock and Commodity Exchanges

We serve as a cash-clearing bank for major stock and commodity exchanges in India, including the National Stock Exchange of India Limited (“National Stock Exchange”) and the Bombay Stock Exchange Limited or BSE Limited. As a clearing bank, we provide the exchanges or their clearing corporations with a means for collecting cash payments due to them from their members or custodians and a means of making payments to these institutions. We make payments once the broker or custodian deposits the funds with us. In addition to benefiting from the cash float, which reduces our overall cost of funds, in certain cases we also earn commissions on such services.services in certain cases.

Custodial Services

We provide custodial services principally to Indian mutual funds, as well as to domestic and international financial institutions. These services include safekeeping of securities and collection of dividend and interest payments on securities. Most of the securities under our custody are in book-entry (dematerialized) form, although we provide custody for securities in physical form as well for our wholesale banking clients. We earn revenue from these services based on the value of assets under safekeeping and the value of transactions handled.

Correspondent Banking Services

We act as a correspondent bank forco-operative banks, co-operative societiesforeign banks and foreignselect private banks. We provide cash management services, funds transfers and services, such as letters of credit, foreign exchange transactions and foreign check collection. We earn revenue on afee-for-service basis and benefit from the cash float, which reduces our overall cost of funds.

We are well positionedwell-positioned to offer this service toco-operative banks, foreign banks and foreignselect private banks in light of the structure of the Indian banking industry and our position within it.Co-operative banks are generally restricted to a particular state and foreign banks / some private banks have limited branch networks. The customers of these banks frequently need services in other areas of the country where their own banks cannot provide. Because of our technology platforms, our geographical reach and the electronic connectivity of our branch network, we can provide these banks with the ability to provide such services to their customers.

Tax Collections

We were the first private sector bank to behave been appointed by the governmentGovernment of India to collect direct taxes. In fiscal 2014,year ended March 31, 2016 and March 31, 2017, we collected Rs. 1,3941,885 billion and Rs. 2,158 billion, respectively, of direct taxes for the governmentGovernment of India. We are also appointed to collect sales, excise and service tax within certain jurisdictions in India. In fiscal 2014,year ended March 31, 2016 and March 31, 2017, we collected over Rs. 7221,246 billion and Rs. 1,522 billion, respectively, of such indirect taxes for the governmentGovernment of India and relevant state governments. We earn a fee from the Government of India for each tax collection and benefit from the cash float. We hope to expand our range of transactional services by providing more services to government entities.

The Government of India implemented the Goods and Services Tax (“GST”) effective July 1, 2017. We have been designated as one of the authorized banks by the Government for collection of GST.

Treasury

Overview

Our treasury group manages our balance sheet, including our maintenance of reserve requirements and the management of market and liquidity risk. Our treasury group also provides advice and execution services to our corporate and institutional customers with respect to their foreign exchange and derivatives transactions. In addition, our treasury group seeks to optimize profits from our proprietary trading, which is principally concentrated on Indian government securities.

Our client-based activities consist primarily of advising corporate and institutional customers and transacting spot and forward foreign exchange contracts and derivatives. Our primary customers are multinational corporations, large and medium sized domestic corporations, financial institutions, banks and public sector undertakings. We also advise and enter into foreign exchange contracts with some small companies andnon-resident Indians.

The following describes our activities in the foreign exchange and derivatives markets, domestic money markets and debt securities desk and equities market. See also “Risk Management”“—Risk Management” for a discussion of our management of market risk.

Foreign Exchange and Derivatives

We enter into forward exchange contracts, currency options, forward rate agreements, currency swaps and rupee interest rate swaps with inter-bank participants. To support our clients’ activities, we are an active participant in the Indian inter-bank foreign exchange market. We also trade, to a more limited extent, for our own account. We also engage in proprietary trades of rupee-based interest rate swaps and use them as part of our asset liability management. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to exchange cash flows by way of interest in one currency against another currency and exchange of principal amounts at maturity based on predetermined rates. Rupee interest rate swaps are commitments to exchange fixed and floating rate cash flows in rupees. A forward rate agreement gives the buyer the ability to determine the underlying rate of interest for a specified period commencing on a specified future date (the settlement date) when the settlement amount is determined being the difference between the contracted rate and the market rate on the settlement date. Currency options give the buyer the right, but not an obligation, to buy or sell specified amounts of currency at agreed rates of exchange on or before a specified future date.

The following table presents the aggregate notional principal amounts of our outstanding foreign exchange and derivative inter-bank contracts as of March 31, 2012, 20132015, 2016 and 2014,2017, together with the fair values on each reporting date:

We may be subject to claims by third parties, both inside and outside India, if we breach their intellectual property rights by using slogans, names, designs, software or other such rights, which are of a penalty imposed bysimilar nature to the RBI.intellectual property these third parties may have registered. Any regulatory investigations, fines, sanctions, and requirements relatinglegal proceedings which result in a finding that we have breached third parties’ intellectual property rights, or any settlements concerning such claims, may require us to conductprovide financial compensation to such third parties or make changes to our marketing strategies or to the brand names of our products, which may have a materially adverse effect on our business prospects, reputation, results of operations and financial crime could negatively affect our business and financial results, or cause serious reputational harm.

The RBI is empowered under the Banking Regulation Act, to impose penalties on banks and their employees to enforce applicable regulatory requirements. In June 2013, the RBI imposed a penalty of Rs. 45 million on the Bank for certain irregularities and violations discovered by the RBI, namely, non-observance of certain safeguards in respect of arrangement of “at par” payment of checks drawn by cooperative banks, exceptions in periodic review of risk profiling of account holders, non-adherence to KYC rules for walk-in customers (non-customers) including for sale of third party products, sale of gold coins for cash in excess of Rs. 50,000 in certain cases and non-submission of proper information required by the RBI. The penalty was imposed pursuant to a scrutiny by the RBI of our books of accounts, internal control, compliance systems and processes during March and April 2013. In July 2014, the RBI levied a penalty of Rs. 0.5 million on the Bank on grounds that it failed to exchange information about the conduct of a corporate borrower’s account with other banks at intervals as prescribed in the RBI guidelines on ‘Lending under Consortium Arrangement/Multiple Banking Arrangements’. The RBI carried out a scrutiny of the corporate borrower’s loan and current accounts maintained with 12 Indian banks, including our Bank. The RBI had issued show cause notices in March 2014. Based on its assessment, the RBI in its press release dated July 25, 2014, levied penalties totaling Rs. 15 million on the 12 Indian banks. See “Supervision and Regulation—Penalties”. We cannot predict the initiation or outcome of any further investigations by other authorities or different investigations by the RBI. The penalty imposed by the RBI has generated adverse publicity for our business. Such adverse publicity, or any future scrutiny, investigation, inspection or audit which could result in fines, public reprimands, damage to reputation, significant time and attention from our management, costs for investigations and remediation of affected customers, may materially adversely affect our business and financial results.condition.

Negative publicity could damage our reputation and adversely impact our business and financial results.

ReputationReputational risk, or the risk to our business, earnings and capital from negative publicity, is inherent in our business. The reputation of the financial services industry in general has been closely monitored as a result of the financial crisis and other matters affecting the financial services industry. Negative public opinion about the financial services industry generally or us specifically could adversely affect our ability to keepattract and attractretain customers, and may expose us to litigation and regulatory action. Negative publicity can result from our actual or alleged conduct in any number of activities, including lending practices, mortgage servicing and foreclosure practices, corporate governance, regulatory compliance, mergers and acquisitions and related disclosure, sharing or inadequate protection of customer information, and actions taken by government regulators and community organizations in response to that conduct. Although we take steps to minimize reputationreputational risk in dealing with customers and other constituencies, we, as a large financial services organization with a high industry profile, are inherently exposed to this risk.

We face cyber threats, such as hacking, phishing and trojans, attempting to exploit our network to disrupt services to customers and/or theft of sensitive internal Bank data or customer information. This may cause damage to our reputation and adversely impact our business and financial results.

We offer internet banking services to our customers. Our internet banking channel includes multiple services such as electronic funds transfer, bill payment services, usage of credit cardson-line, requesting account statements, and requesting check books. We are therefore exposed to various cyber threats such as: a) phishing and trojans—trojans targeting our customers, whereinwhereby fraudsters send unsolicited mails to our customers seeking account sensitiveaccount-sensitive information or to infectinfecting customer machinescomputers in an attempt to search and attempt exfiltration of account sensitiveexport account-sensitive information; b) hacking—whereinhacking, whereby attackers seek to hack into our website with the primary intention of causing a reputational damage to us by disrupting services; and c) data theft—whereintheft whereby cyber criminals may attempt to intrude into our network with the intention of stealing our data or information. These threat vectorsinformation or to extort money. Attempted cyber threats fluctuate in frequency of attempts but are generally not decreasingincreasing in frequency. There is also the risk of our customers incorrectly blaming us and terminating their accounts with us for a cyber-incident which might have occurred on their own system or with that of an unrelated third party. Any cyber security breach could also subject us to additional regulatory scrutiny and expose us to civil litigation and possible related financial liability.

HDFC Limited controls a significant percentageOur business is highly competitive, which makes it challenging for us to offer competitive prices to retain existing customers and solicit new business, and our strategy depends on our ability to compete effectively.

We face strong competition in all areas of our share capitalbusiness, and exercises substantial influence over board decisions, which could result in HDFC Limited making decisions or foregoing opportunities to benefit HDFC Limited that restrict our growth and harm our financial condition.

HDFC Limited and its subsidiaries owned 22.6%some of our equitycompetitors are larger than we are. We compete directly with large public and private sector banks, some of which are larger than we are based on certain metrics such as of March 31, 2014. So longcustomer assets and deposits, branch network and capital. These banks are becoming more competitive as HDFC Limitedthey improve their customer services and its subsidiaries hold at least a 20% equity stake in us, HDFC Limited is entitled to nominate two directors including our Chairman and Managing Director who are not required to retire by rotation to our board, subject to RBI approval. Our current Chairman and Managing Director were nominated by HDFC Limited and appointedtechnology. In addition, we compete directly with the approval of our shareholders and the RBI. Two of our other directors, Mr. Keki Mistry is the Vice Chairman and Chief Executive Officer and Mrs. Renu Karnad, is the Managing Director of HDFC Limited. Accordingly, HDFC Limited can exercise substantial influence over our board and over matters subject to a shareholder vote. Mr. D. M. Sukthankar is the father of our Deputy Managing Director, Mr. Paresh Sukthankar, and serves as an independent director on the board of HDFC Limited. Mr. D. M. Sukthankar has been on the board of HDFC Limited since 1989. Mr. Paresh Sukthankar was one of our early employees and also a partforeign banks, which include some of the initial senior management team. He was elevated to the position of Deputy Managing Director with effect from December 2013. Both are associated with the respectivelargest multinational financial companies in their independent professional capacities and we believe that none is in a position to exercise influence over the other.

There have been reports in the Indian media suggesting that we may merge with HDFC Limited. We consider business combination opportunities as they arise. At present, we are not actively considering a business combination with HDFC Limited. Any significant business combination would involve compliance with regulatory requirements and shareholder and regulatory approvals. Were such a combination to occur, we cannot predict the impact it would have on our business, growth prospects or the prices of our equity shares and ADSs.

world. See “—We may face conflictsincreased competition as a result of interest relatingrevised guidelines that relax restrictions on the presence of foreign banks in India and a proposal by the RBI to our principal shareholder, HDFC Limited,grant fresh banking licenses for the establishment of new banks in the private sector which could cause us to forgolose existing business opportunities and consequently have an adverse effect on our financial performance.or be unable to compete effectively for new business.

HDFC Limited is primarily engaged in”In addition, new entrants into the financial services industry, including home loans, property-related lendingcompanies in the financial technology (“Fintech”) sector, may further intensify competition in the business environments, especially in the digital business environment, in which we operate, and deposit products. The subsidiariesas a result, we may be forced to adapt our business to compete more effectively. There can be no assurance that we will be able to respond effectively to current or future competition. Due to competitive pressures, we may be unable to successfully execute our growth strategy and associated companies of HDFC Limited are also largely engaged in a range of financial services, including asset management, life and other insurance and mutual funds. Although we have no agreements with HDFC Limited or any other HDFC group companies that restrict us from offering products and services that are offered by them, our relationship with these companies may cause us not to offer products and services that are already offered by other HDFC group companiesat reasonable returns and this may effectively prevent us from taking advantage of business opportunities. See “Related Party Transactions” inadversely impact our Annual Report on Form 20-F for fiscal 2012, 2013 and 2014 for a summary of transactions we have engaged in and strategic investments made with HDFC Limited during fiscal 2012, 2013 and 2014. Also see Note 28 – “Related party transactions”, in our consolidated financial statements. We currently distribute products of HDFC Limited and its group companies.business. If we forego opportunities because ofare unable to retain and attract new customers, our relationship with HDFC Limited, itrevenue and net income will decline, which could have a material adverse effect onmaterially adversely affect our financial performance.condition. See “Business—Competition”.

RBI guidelines relating to ownership in private banks could discourage or prevent a change of control or other business combination involving us, such as with HDFC Limited, which could restrict the growth of our business and operations.

        RBI guidelines prescribe a policy framework for the ownership and governance of private sector banks. The guidelines state that no single entity or group of entities will be permitted to own or control, directly or indirectly, more than 10% of the paid-up capital of a private sector bank without RBI approval. The implementation of such a restriction could discourage or prevent a change in control, merger, consolidation, takeover or other business combination involving us, which might be beneficial to our shareholders. The RBI’s acknowledgement is required for the acquisition or transfer of a bank’s shares, which will increase the aggregate holding (direct and indirect, beneficial or otherwise) of an individual or a group to the equivalent of 5% or more of its total paid-up capital. The RBI, when considering whether to grant an approval, may take into account all matters that it considers relevant to the application, including ensuring that shareholders whose aggregate holdings are above specified thresholds meet fitness and propriety tests. The RBI has accorded its approval for HDFC Limited to hold more than 10% of our stock. HDFC Limited’s substantial stake in us could discourage or prevent another entity from exploring the possibility of a combination with us. These obstacles to potentially synergistic business combinations could negatively impact our share price and have a material adverse effect on our ability to compete effectively with other large banks and consequently our ability to maintain and improve our financial condition.

We may face increased competition as a result of revised guidelines that relax restrictions on the presence of foreign banks in India and a proposal by the RBI to grant fresh banking licenses for the establishment of new banks in the private sector which could cause us to lose existing business or be unable to compete effectively for new business.

The Government of India regulates foreign ownership in private sector banks. Foreign ownership up to 74%49% of thepaid-up capital is permitted in Indian private sector banks however,under the automatic route and this limit can be increased up to 74% with prior approval of the concerned authority. However, under the Banking Regulation Act a shareholder cannot exercise voting rights in excess of 10% of the total voting rights. The ceiling on voting rights may be increased in a phased manner up to 26% by the RBI. The RBI on February 28, 2005, released a “Roadmap for Presencehas also from time to time issued various circulars and regulations regarding ownership of Foreign Banksprivate banks and licensing of new private sector banks in IndiaIndia. See “Supervision and Guidelines on ownership and Governance in Private Sector Banks” (the “Roadmap”).

The Roadmap envisages two phases. During the first phase, between March 2005 and March 2009, foreignRegulation—Entry of new banks were permitted to establish their presence in India by way of setting up a wholly-owned banking subsidiary (“WOS”) or converting their existing branches into a WOS. The WOS must have minimum capital of Rs. 3 billion and ensure sound corporate governance.

Initially, equity participation by banks would be permitted only in the private sector banks that are identified by the RBI for restructuring. On an application made by a foreign bank for acquisition of 5% or more in any private bank, the RBI would consider the standing and reputation of the foreign bank and shall permit such acquisition only if it is satisfied that the investment by such foreign bank is in the long-term interest of all the stakeholders of the investee bank. It was proposed that in the second phase, beginning April 2009, the RBI would allow foreign banks to acquire up to 74% of equity capital in private sector banks in India, and would also enact appropriate amendments to the Banking Regulation Act to provide for voting rights commensurate with economic ownership. However, in light of the global financial turmoil and concerns regarding financial strength of banks around the world, the RBI decided to put on hold the second phase of the Roadmap and leave unchanged its policy on the presence of foreign banks in the country. While announcing its annual policy for fiscal 2010, the RBI said that it would continue with the current policy and procedures governing the presence of foreign banks in India. A review will happen once there is greater clarity regarding stability, recovery of the global financial system, and a shared understanding on the regulatory and supervisory architecture around the world. In January 2011, the RBI released a discussion paper on the presence of foreign banks in India, seeking comments and suggestions. In November 2013, the RBI released its framework for establishing wholly owned subsidiaries of foreign banks in India, which aims to tighten regulatory control and encourage foreign banks to convert their existing branches into wholly owned subsidiaries. Any growth in the presence of foreign banks or in foreign investments in Indian banks may increase the competition that we face and as a result have a material adverse effect on our business. See “Restrictions on Foreign Ownership of Indian Securities””.

In February 2013, the RBI released guidelines for the licensing of new banks in the private sector. The key items covered under these guidelines include: i) promoters eligible to apply for banking licenses; ii) corporate structure; iii) minimum capital requirements for new banks; iv) foreign shareholding cap; v) corporate governance; and vi) business plan. The RBI has permitted private sector entities owned and controlled by Indian residents and entities in the public sector in India to apply to the RBI for a license to operate a bank through a wholly owned wholly-ownednon-operative financial holding company (NOFHC) route, subject to compliance with certain specified criteria. Such a non-operative financial holding company isNOFHC was permitted to be the holding company of the bank as well as any other financial services entity, with the objective that the holding company ring fencesring-fences the regulated financial services entities in the group, including the bank, from other activities of the group. Pursuant to these guidelines, IDFC Bank and Bandhan Bank commenced banking operations in fiscal 2016.

In November 2014, the RBI released guidelines for the licensing of payments banks and small finance banks in the private sector. In August 2015, the RBI granted“in-principle” approval to eleven applicants to set up payments banks. Of the eleven approved applicants, three withdrew their applications citing business concerns. As of now, there are three operational payments banks in India. In September 2015, the RBI also granted“in-principle” approval to ten applicants to set up small finance banks. All ten applicants have received their final license. Some of these small finance banks have commenced their operations in fiscal 2017.

In August 2016, the RBI released final guidelines for“on-tap” Licensing of Universal Banks in the Private Sector. The guidelines aim at moving from the current “stop and go” licensing approach (wherein the RBI specified July 1,notifies the licensing window during which a private entity may apply for a banking license) to a continuous or“on-tap” licensing regime. Among other things, the new guidelines specify conditions for the eligibility of promoters, corporate structure and foreign shareholdings. One of the key features of the new guidelines is that, unlike the February 2013 asguidelines (mentioned above), the deadline for submissionnew guidelines make the NOFHC structurenon-mandatory in the case of applications for setting uppromoters being individuals or standalone promoting/converting entities which do not have other group entities.

In May 2016, the RBI also issued the Reserve Bank of India (Ownership in Private Sector Banks) Directions, 2016. These guidelines prescribe requirements regarding shareholding and voting rights in relation to all private sector banks licensed by the RBI to operate in India. See “Supervision and Regulation—Entry of new banks in the private and it received about 26 applications for new bank licenses, including from somesector”.

Any growth in the presence of the largest business groups in India. After review of the applications received, the RBI provided in-principle approvals to two applicants which are valid for a period of 18 months, during which the foreign banksornew banks will have to be set up. The RBI will grant these new banks a license to commence banking operations only after being satisfied that the applicants have complied with the conditions established as part of the “in-principle” approvals. If the number of banks in the country increases,private sectormay increase the competition that we will face increased competition in the businesses we operate in. This couldand, as a result, have a material adverse effect on our business and financial results.

Foreign investment in our shares may be limited pending an application to the FIPB and the RBI to permit additional aggregate foreign investment in the Bank’s paid-up equity share capital.

        Aggregate foreign investment in the Bank from all sources (including from foreign portfolio investors (FPIs)) may not exceed 49.0% of our paid-up equity share capital under the automatic rules of the RBI; however, the limit for aggregate foreign investment in the Bank from all sources may be increased to an amount that may not exceed 74.0% of our paid-up equity share capital upon the submission and approval of the Bank’s application to the Foreign Investment Promotion Board of India (FIPB). The Bank was informed in October 2013 that the aggregate foreign investment in the bank exceeded 49% of our paid-up equity share capital. The Bank submitted an application to the FIPB in November 2013 to permit increased foreign investment in the Bank in an amount up to 67.55% of its shares. In December 2013, the RBI banned any further purchases of the Bank’s shares by foreign investors until a determination is made on our application. In June 2014 at the Bank’s Annual General Meeting, a resolution was passed permitting the combined foreign investment in the Bank up to an aggregate limit of 74% of the equity share capital of the Bank. Accordingly, we are preparing to submit a second application to the FIPB to allow for aggregate foreign investment in the Bank of 74% of the equity share capital. See “Supervision and Regulation—Foreign Ownership Restriction”. Until the FIPB and the RBI (i) make a determination on our pending application to increase the permitted aggregate foreign investment of the Bank to 67.55%, (ii) make a determination on our additional application to further increase the permitted foreign investment in the Bank to 74% and (iii) lift the December 2013 ban on additional foreign acquisitions on our equity capital stock, there will continue to be limitations on foreign investments in our shares. These limitations could negatively affect the price of our shares and ADSs and could limit the ability of investors to trade our shares or ADSs in the market. These limitations could also negatively affect the Bank’s ability to raise additional capital to meet our capital adequacy requirements or to fund future growth through future issuances of additional equity shares, which could have a material adverse effect on our business and financial results.

Delays in obtaining prior RBI approval and/or our inability to meet the criteria specified by RBI for opening new branches to increase our infrastructure and expand our reach into different geographical segments will restrict our expansion plans and have a negative impact on our future financial performance by preventing us from realizing anticipated revenue from the new branches.

The RBI issues instructions and guidelines to banks on branch authorization from time to time. Section 23 of the Banking Regulation Act provides that banks must obtain the prior approval of the RBI to open new branches. The RBI may cancel a license for violations of the conditions under which it was granted. With the objective of liberalizing and rationalizing the branch licensing process, the RBI, effective October 2013, granted general permission to banks like us to open branches in Tier 1 to Tier 6 centers, subject to reporting to the RBI and certain specified conditions. If we are unable to perform in a manner satisfactory to the RBI or comply with the specified conditions, it may have an impact on the number of branches we will be able to open and would in turn have an impact on our future growth. This would adversely affect our financial performance by preventing us from realizing anticipated revenue from the new branches. See “Supervision and Regulation—Regulation Relating to the Opening of Branches”.

If the goodwill recorded in connection with our recent acquisitions becomes impaired, we may be required to record impairment charges, which would decrease our net income and total assets.

In accordance with USU.S. GAAP, we have accounted for our acquisitions using the purchase method of accounting. We recorded the excess of the purchase price over the fair value of the assets and liabilities of the acquired companies as goodwill. USU.S. GAAP requires us to test goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. Goodwill is tested by initially estimating fair value of the reporting unit and then comparing it against the carrying amount including goodwill. If the carrying amount of a reporting unit exceeds its estimated fair value, we are required to record an impairment loss. The amount of impairment and the remaining amount of goodwill, if any, is determined by comparing the implied fair value of the reporting unit as of the test date against the faircarrying value of the assets and liabilities of that reporting unit as of the same date. See Note 2u, “Business Combination”,“Business Combination” in our consolidated financial statements.

Many of our branches have been recently added to our branch network and are not operating with the same efficiency as compared to the rest of our existing branches, which adversely affects our profitability.

As at March 31, 2009,2012, we had 1,4122,544 branches which included more than 400 branches acquired pursuant to the merger of Centurion Bank of Punjab with HDFC Bank Limited effective May 23, 2008. We have continued to grow organically by commissioning new branches. Asand as at March 31, 2014,2017, we had 3,4034,715 branches, a significant increase in the number of branches. Some of the newly added branches are currently operating at a lower efficiency level as compared with our established branches. While we believe that the newly added branches will achieve the productivity benchmark set for our entire network over time, the success in achieving our benchmark level of efficiency and productivity will depend on various internal and external factors, some of which are not under our control. Thesub-optimal performance of the newly added branches, if continued over an extended period of time, would have a material adverse effect on our profitability.

Deficiencies in accuracy and completeness of information about customers and counterparties may adversely impact us.

We rely on accuracy and completeness of information about customers and counterparties while carrying out transactions with them or on their behalf. We may also rely on representations as to the accuracy and completeness of such information. For example, we may rely on reports of independent auditors with respect to financial statements, and decide to extend credit based on the assumption that the customer’s audited financial statements conform to generally accepted accounting principles and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. Our financial condition and results of operations could be negatively impacted by such reliance on information that is inaccurate or materially misleading. The nationwide credit bureau has only recently become operational in India. This may affect the quality of information available to us about the credit history of our borrowers, especially individuals and small businesses. As a consequence,result, our ability to effectively manage our credit risk may be adversely affected.

We present our financial information differently in other markets or in certain reporting contexts.

In India, our equity shares are traded on the BSE Limited (the “BSE”) and National Stock Exchange of India Limited (the “NSE”). Under Indian laws and rules, we are required to report our financial results in India in Indian GAAP. Because of the difference in accounting principles and presentation, certain financial information available in our required filings in the United States may be presented differently than in the financial information we provide under Indian GAAP.

Additionally, we make available information on our website and in our presentations in order to provide investors a view of our business through metrics similar to what our management uses to measure our performance. Some of the information we make available from time to time may be in relation to our unconsolidated or our consolidated results under Indian GAAP or under U.S. GAAP. Potential investors should read any notes or disclaimers to such financial information when evaluating our performance to confirm how the information is being presented, since the information that may have been prepared with a different presentation may not be directly comparable.

Scheduled commercial banks in India, including us, insurers/ insurance companies andnon-banking financial companies, will be required to prepare financial statements under IFRS or a variation thereof, Indian Accounting Standards, as per the implementation roadmap drawn up by the Ministry of Corporate Affairs. In addition, we may adopt IFRS for the purposes of our filings pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”). If we do, we may be adversely affected by this transition.

The Ministry of Corporate Affairs, in its press release dated January 18, 2016, issued a roadmap for the implementation of Indian Accounting Standards(“IND-AS”) converged with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) with certain carve-outs for scheduled commercial banks, insurance companies andnon-banking financial companies (the “2016 Roadmap”). The 2016 Roadmap requires such institutions to prepareIND-AS-based financial statements for accounting periods commencing on or after April 1, 2018, and to prepare comparative financial information for accounting periods commencing on or after April 1, 2017. The RBI, in its circular dated February 11, 2016, requires all scheduled commercial banks to comply withIND-AS for financial statements for the periods stated above. The RBI does not permit banks to adoptIND-AS earlier than these timelines. Recently, in June 2017, the Insurance Regulatory and Development Authority of India (“IRDA”) deferred the effective date for implementation ofIND-AS accounting model in the insurance sector by two years.

In conjunction with the implementation ofIND-AS for our local Indian results, we may adopt IFRS for the purposes of our filings pursuant to Section 13 or 15(d) of, and our reports pursuant to Rule13a-16 or15d-16 under, the Exchange Act. Should we choose to do so, our first year of reporting in accordance with IFRS would be for the accounting period commencing on April 1, 2018 and, as such, we would be permitted to file two years, rather than three years, of statements of income, changes in shareholders’ equity and cash flows prepared in accordance with IFRS.

The new accounting standards are expected to change, among other things, our methodologies for estimating allowances for probable loan losses and classifying and valuing our investment portfolio, as well as our revenue recognition policy. It is possible that our financial condition, results of operations and changes in shareholders’ equity may appear materially different underIND-AS or IFRS than under Indian or U.S. GAAP, respectively. Further, during the transition to reporting under the new standards, we may encounter difficulties in the ongoing implementation of the new standards and development of our management information systems. Given the increased competition for the small number of IFRS-experienced accounting personnel in India, it may be difficult for us to employ the appropriate accounting personnel to assist us in preparingIND-AS or IFRS financial statements. Moreover, there is no significant body of established practice from which we may draw when forming judgments regarding the application of the new accounting standards. There can be no assurance that the Bank’s controls and procedures will be effective in these circumstances or that a material weakness in internal control over financial reporting will not occur. Further, failure to successfully adoptIND-AS or IFRS could adversely affect the Bank’s business, financial condition and results of operations.

Risks Relating to Investments in Indian Companies

A slowdownFinancial instability in economic growth in India wouldother countries may cause us to experience slower growth in our asset portfolio and deterioration in the quality of our assets.

Our performance and the quality and growth of our assets are necessarily dependent on the health of the overall Indian economy. The global slowdown of the financial market and economies had contributed and may continue to cause a slowdownincreased volatility in the Indian financial market.

The Indian market and the Indian economy are influenced by the economic environment, with attendant higher unemployment rates and decreasesmarket conditions in purchasing power. Whileother countries, particularly the domestic economy started witnessing an overall improvementemerging market countries in Asia. Financial turmoil in Asia, Russia and elsewhere in the general financial andworld in recent years has affected the Indian economy. Although economic conditions weare different in each country, investors’ reactions to developments in one country can have begunadverse effects on the securities of companies in other countries, including India. A loss of investor confidence in the financial systems of other markets may cause increased volatility in the Indian financial market and, more generally, in the Indian economy. Any financial instability or disruptions could also have a negative impact on the Indian economy and could harm the Bank’s business, its future financial performance and the prices of its equity shares and ADSs.

The global credit and equity markets have experienced substantial dislocations, liquidity disruptions and market corrections in recent years. In particular,sub-prime mortgage loans in the United States have experienced increased rates of delinquency, foreclosure and loss. The recent history of financial crises which have affected both emerging and developed economies has given rise to witness a reversal on account of high inflationheightened liquidity and turbulencecredit concerns and caused an increase in interest rates. These conditions, includingvolatility in the global credit and financial crisis and problemsmarkets. Developments in the Eurozone have further exacerbated concerns relating to liquidity and volatility in global capital markets.

Developments in the Eurozone during the past couple of years have exacerbated the ongoing global economic crisis. Large budget deficits and rising public debts have triggered sovereign debt crisis in multiple European countries that resulted in the bailout of certain economies and increased the risk of government debt defaults, forcing governments to undertake aggressive budget cuts and austerity measures. On the back of this crisis, the U.K. voted to leave the European Union in 2016, prompting a plunge in the sterling and a credit rating downgrade. The outcome of the U.K. referendum created fear of potential further exits from the European Economic and Monetary Union. Some of these apprehensions have been alleviated by favorable outcomes of the Dutch and French elections results. However, the terms of the U.K.’s exit from the European Union are yet to be negotiated and this uncertainty regarding the future of the relationship between the United Kingdom and the European Union could resultkeep financial markets on edge. In addition, the sovereign ratings of various European Union countries have been downgraded since 2012. Financial markets and the supply of credit could continue to be negatively impacted by ongoing concerns surrounding the sovereign debts and fiscal deficits of European countries, the possibility of further downgrades of, or defaults on, sovereign debt, concerns regarding a slowdown in growth in certain economies and the adoption of negative interest rates in developed economies, as well as uncertainties regarding the stability and overall standing of the European Monetary Union. These and other related events have had a prolonged slowdownsignificant impact on the global credit and financial markets as a whole, including reduced liquidity, greater volatility, the widening of credit spreads and a lack of price transparency.

In response to such developments, legislators and financial regulators in the United States, Europe and other jurisdictions, including India, have implemented several policy measures designed to add stability to the financial markets. However, the overall impact of these and other legislative and regulatory efforts on the global financial markets is uncertain, and they may not have the intended stabilizing effects. In the event that the current adverse conditions in the global credit markets continue or if there is any significant financial disruption, this could cause increased volatility in the Indian economy, which would adversely affectfinancial market and have an adverse effect on our business, including our ability to grow our asset portfolio,future financial performance and the qualitytrading price of our assets and our ability to implement our strategy. In particular, because India depends significantly on imported oil for its energy needs, the Indian economy is adversely affected by volatile oil prices, consequent inflation and weather conditions adversely affecting agriculture or other factors. In addition, the Indian economy is in a state of transition. The share of the services sector of the economy is rising, while that of the industrial, manufacturing and agricultural sectors is declining. Finally, India faces major challenges in sustaining its growth, which include the need for substantial infrastructure development and improving access to healthcare and education. If the Indian economy deteriorates, our asset base may erode, which would result in a material decrease in our net income and total assets.equity shares.

Any adverse change in India’s credit rating, or the credit rating of any country in which our foreign branches are located, by an international rating agency could adversely affect our business and profitability.

In May 2013,The Bank is ratedBBB- by Standard & Poor’s (S&P), an international rating agency, reiterated its negativewhile the Bank’s medium term notes program is rated Baa3 by Moody’s, another international rating agency. In the case of the international rating agencies, the ratings of all Indian banks are capped at the sovereign rating (that is,BBB- by S&P and Baa3 by Moody’s). In India, the Bank is rated AAA by CRISIL, CARE and India Ratings (the Indian arm of Fitch Ratings), which are the highest credit ratings assigned on the domestic scale.

There is a risk that the Bank’s ratings may be downgraded when the rating agencies revise their outlook on India’s creditsovereign rating or when there is a significant deterioration in the Bank’s existing financial strength and business position. The Bank’s rating may also be revised when the rating agencies undertake changes to their rating methodologies. For instance, in April 2015, Moody’s revised its bank rating methodology and the assessment of government support to banks, following which the ratings of several banks globally, including Indian banks, were revised. Following this methodology change, the Bank’s rating was revised to Baa3 from Baa2 so as to cap it at the Indian sovereign rating. It identified India’s high fiscal deficit and heavy government borrowing as

In addition, the most significant constraints on its ratings, and recommendedrating of our foreign branches may be impacted by the implementation of reforms and containment of deficits. In June 2013, Fitch, another internationalsovereign rating agency, returned India’s sovereign outlook to “stable” from “negative” a year after its initial downgrade of the outlook stating thatcountry in which those branches are located, particularly if the authorities had been successfulsovereign rating is below India’s rating. Any revision to the sovereign rating of the countries in containingwhich our branches are located to below India’s rating could impact the upward pressurerating of our foreign branches and any securities issued from those branches. In fiscal 2016, declining oil prices caused the credit ratings of many oil exporting countries to be downgraded. In February 2016, S&P lowered its long- and short-term foreign and local currency sovereign credit ratings on the central government budget deficitKingdom of Bahrain to BB/B (stable) fromBBB-/A3 (negative). We have outstanding bonds issued from our Bahrain branch. The rating criteria published by S&P restrict the rating of any bond issued in a jurisdiction to the facehost country rating. As such, following Bahrain’s sovereign credit rating downgrade, S&P placed the long-term issue rating of the senior unsecured bonds issued by our Bahrain branch on CreditWatch with negative implications. Subsequent to the rating action, we put a structure in place guaranteeing payment on these bonds by our Hong Kong branch or one of our Indian branches should our Bahrain branch be unable to service these bonds. In July 2016, S&P removed these bonds from CreditWatch with negative implications and affirmed the senior unsecured bonds’weaker-than-expectedBBB- long-term issue rating.

Going forward, the sovereign ratings outlook for India will remain dependent on the growth of the economy and that the authorities had also begun to address structural factors that have weakenedinflation environment, as well as exercise of adequate fiscal restraint by the investment climate and growth prospects.government. Any adverse change in India’s credit ratingsrating, or the credit rating of any country in which our foreign branches are located, by international rating agencies may adversely impact our business financial position and liquidity, limit our access to capital markets.

The Bank’s long term unsecured, subordinated (tier II) bonds are rated “CARE AAA” by CAREmarkets, and “AAA (ind)” (with the outlook on the rating as “stable”) by Fitch Ratings India Private Limited. CARE has also rated the Bank’s Certificate of Deposit (CD) program “PR 1+” which represents “superior capacity for repayment of short term promissory obligations”. Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the “tAAA (ind)” rating to the Bank’s deposit program, with the outlook on the rating as “stable”. Any downgrade from the current credit rating of our borrowings may result in an increase in interest rates or require us to prepay such borrowings, thereby impacting our cost of borrowing and liquidity.borrowing.

Any volatility in the exchange rate may lead to a decline in India’s foreign exchange reserves and may affect liquidity and interest rates in the Indian economy, which could adversely impact us.

Capital inflows into Indiaflows have remained extremely volatile responding to concernspicked up substantially during fiscal 2017, reflecting a reassessment of investor expectations about future domestic growth prospects following the domestic macroeconomic landscape and changeselection of apro-reform government in the global risk environment.2014. While the current account deficit (CAD)Current Account Deficit (“CAD”) remained a main area of concern over fiscal 2012 and fiscal 2013, it has shrunk sharply in fiscal 2014.2014 to 1.7% of GDP, and fell further in fiscal 2016 to 0.7% of GDP, respectively. It is likely to remain at around 1% in fiscal 2017 as well. A substantialsharp contraction in the oil imports bill on the back of a near fifty percent decline in global crude prices was the imports bill reflecting weakmain reason behind the improvement in the current account position. During fiscal 2014, the rupee came under immense and sustained selling pressure driven by growing anxiety about domestic growth as well as a sharp reductionprospects and global risk aversion. The rupee depreciated in gold imports ledfiscal 2014 by 10.1% against the U.S. dollar. Investor expectations that reforms implemented by India’s government will lead to a significant narrowingan improvement in the trade deficit thatlong-term growth outlook helped to improve the rupee’s performance, reducing the depreciation trend to 3.85% in turn reducedfiscal 2015. During fiscal 2016 the size of the CAD.rupee depreciated by 6.32% primarily reflecting global risk aversion and a strong U.S. dollar. However, the main problem forin line with other emerging markets, which experienced currency appreciation in fiscal 2017, the Indian rupee wasalso appreciated by 2.1% against the volatile swings in capital flows. The shifts in capital flows is reflected in the fact that Indian rupee recorded a high of Rs. 53.65 to US dollar and a low of Rs. 68.80 to the US dollar during fiscal 2014. Even thoughU.S. dollar. Going forward, the Indian rupee has been fairly stable since start of calendar year 2014, it may come back under pressure givenbe impacted by factors such as: (a) the possibility of a gradual reversaltightening in USU.S. monetary policy, that may result(b) the rise in protectionist voices across the world (c) uncertainty surrounding the United Kingdom’s exit from the European Union, (d) the slower pace of growth in China, and (e) the prospect of an normal monsoon season, which could revive rural demand. Further, global risk aversion could mean a continuation of the rotation of global fund flows from Emerging Marketsemerging markets to U.S. markets over the US markets. Additionally, some anxiety aboutmedium term. However, the prospectIndian rupee may be less vulnerable than other emerging market currencies on the back of sub-normal monsoons driving upan improvement in the CAD and a moderation in inflation pressures could make investors circumspect of investing in domestic assets. The need torates. Nevertheless, it remains a possibility that the RBI will intervene in the foreign exchange marketmarkets to controlstamp out excess volatility ofin the exchange rate in the event of potential shocks, such as an increase in U.S. interest rates or a break-down in the negotiations between EU and U.K. policymakers. Any such intervention by the RBI may result in thea decline in India’s foreign exchange reserves and, subsequently, reduce the amount of liquidity in the domestic financial system. Thissystem, which would, in turn, could cause domestic interest rates to rise.

Further, any increased volatility in capital flows may also affect monetary policy decision making.decision-making. For instance, a period of net capital outflows might force the RBI to keep monetary policy tighter than optimal to guard against currency depreciation.

Political instability or changes in the government in India could delay the liberalization of the Indian economy and adversely affect economic conditions in India generally, which would impact our financial results and prospects.

Since1991, successive Indian governments have pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector. Nevertheless, the roles of the Indian central and state governments in the Indian economy as producers, consumers and regulators have remained significant.remain significant as independent factors in the Indian economy. The leadershipelection of Indiaapro-business majority government in May 2014 has changed many times since 1996. However,marked a distinct increase in expectations for policy and economic reforms among certain aspects of policy reforms going forward are fairly high given the strong mandateIndian economy. There is no guarantee that the current government receivedwill be able to enact an optimal set of reforms or that any such reforms would continue or succeed if there were a change in the recently concluded general electioncurrent majority leadership in May 2014. However, therethe government in the future. There is also no guarantee that the government will announce an optimal set of reforms or policies in the future. In November 2016, the government undertook demonetization of high denomination notes of Rs. 500 and Rs. 1000. Short-term disruptions that the “cash squeeze” caused, weighed down on the economy. The rate of economic liberalization is subject to change and specific laws and policies affecting banking and finance companies, foreign investment, currency exchange and other matters affecting investment in our securities are continuously evolving as well. In addition, the GST was implemented in India in July 2017 and replaced multiple cascading taxes levied by the Indian central and state governments. Any significant change in India’s economic liberalization, and deregulation policies wouldor other major economic reforms could adversely affect business and economic conditions in India generally and our business in particular.

Terrorist attacks, civil unrest and other acts of violence or war involving India and other countries would negatively affect the Indian market where our shares trade and lead to a loss of confidence and impair travel, which could reduce our customers’ appetite for our products and services.

Terrorist attacks, such as those in Mumbai in November 2008, and other acts of violence or war may negatively affect the Indian markets on which our equity shares trade and also adversely affect the worldwide financial markets. These acts may also result in a loss of business confidence, make travel and other services more difficult and, as a result, ultimately adversely affect our business. In addition, any deterioration in relations between India and Pakistan or between India and China might result in investor concern about stability in the region, which could adversely affect the price of our equity shares and ADSs.

India has also witnessed civil disturbances in recent years and future civil unrest as well as other adverse social, economic and political events in India could have an adverse impact on us. Such incidents also create a greater perception that investment in Indian companies involves a higher degree of risk, which could have an adverse impact on our business and the price of our equity shares and ADSs.

Investors may have difficulty enforcing foreign judgments in India against the Bank or its management.

We are a limited liability company incorporated under the laws of India. Substantially all of the Bank’s directors and executive officers and some of the experts named herein are residents of India and a substantial portion of the assets of the Bank and such persons are located in India. As a result, it may not be possible for investors to effect service of process on the Bank or such persons in jurisdictions outside of India, or to enforce against them judgments obtained in courts outside of India predicated upon civil liabilities of the Bank or such directors and executive officers under laws other than Indian Law.

In addition, India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. Recognition and enforcement of foreign judgments is provided for under section 13 and section 44A of the Indian Civil Procedure Code (the “Civil Procedure Code”). Section 44A of the Civil Procedure Code provides that where a foreign judgment has been rendered by a superior court in any country or territory outside India that the government has, by notification, declared to be a reciprocating territory, that judgment may be enforced in India by proceedings in execution as if it had been rendered by the relevant court in India. However, section 44A of the Civil Procedure Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty and is not applicable to arbitration awards.

The United States has not been declared by the government to be a reciprocating territory for the purposes of section 44A of the Civil Procedure Code. However, the United Kingdom has been declared by the government to be a reciprocating territory and the High Courts in England as the relevant superior courts. A judgment of a court in a jurisdiction which is not a reciprocating territory, such as the United States, may be enforced only by a new suit upon the judgment and not by proceedings in execution. Section 13 of the Civil Procedure Code provides that a foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon except: (i) where it has not been pronounced by a court of competent jurisdiction; (ii) where it has not been given on the merits of the case; (iii) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognize the law of India in cases where such law is applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural justice; (v) where it has been obtained by fraud; or (vi) where it sustains a claim founded on a breach of any law in force in India. The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce a foreign judgment if it viewed the amount of damages awarded as excessive or inconsistent with Indian practice. A party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI to repatriate outside India any amount recovered pursuant to execution. Any judgment in a foreign currency would be converted into Indian rupees on the date of the judgment and not on the date of the payment. The Bank cannot predict whether a suit brought in an Indian court will be disposed of in a timely manner or be subject to considerable delays.

Risks Relating to the ADSs and Equity Shares

Historically, our ADSs have traded at a premium to the trading prices of our underlying equity shares, a situation which may not continue.

Historically, our ADSs have traded on the New York Stock Exchange (the “NYSE”) at a premium to the trading prices of our underlying equity shares on the Indian stock exchanges. See “Price“Price Range of Our American Depositary Shares and Equity Shares”Shares” for the underlying data. We believe that this price premium has resulted from the relatively small portion of our market capitalization previously represented by ADSs, restrictions imposed by Indian law on the conversion of equity shares into ADSs, and an apparent preference for investors to trade dollar-denominated securities. Over time, some of the restrictions on issuance of ADSs imposed by Indian law have been relaxed and we expect that other restrictions may be relaxed in the future. It is possible that in the future our ADSs will not trade at any premium to our equity shares and could even trade at a discount to our equity shares.

Investors in ADSs will not be able to vote.

Investors in ADSs will have no voting rights, unlike holders of the equity shares. Under the deposit agreement, the depositary will abstain from voting the equity shares represented by the ADSs. If you wish, you may withdraw the equity shares underlying the ADSs and seek to vote (subject to Indian restrictions on foreign ownership) the equity shares you obtain upon withdrawal. However, this withdrawal process may be subject to delays and additional costs and you may not be able to redeposit the equity shares. For a discussion of the legal restrictions triggered by a withdrawal of the equity shares from the depositary facility upon surrender of ADSs, see “Restrictions“Restrictions on Foreign Ownership of Indian Securities”Securities” and “Description“Description of American DepositoryDepositary Shares—Voting Rights”Rights”.

Your ability to withdraw equity shares from the depositary facility is uncertain and may be subject to delays.

India’s restrictions on foreign ownership of Indian companies limit the number of equity shares that may be owned by foreign investors and generally require government approval for foreign investments. Investors who withdraw equity shares from the ADS depositary facility for the purpose of selling such equity shares will be subject to Indian regulatory restrictions on foreign ownership upon withdrawal. The withdrawal process may be subject to delays. For a discussion of the legal restrictions triggered by a withdrawal of equity shares from the depositary facility upon surrender of ADSs, see “Restrictions“Restrictions on Foreign Ownership of Indian Securities”Securities”.

Restrictions on deposit of equity shares in the depositary facility could adversely affect the price of our ADSs.

Under current Indian regulations, an ADS holder who surrenders ADSs and withdraws equity shares may deposit those equity shares again in the depositary facility in exchange for ADSs. An investor who has purchased equity shares in the Indian market may also deposit those equity shares in the ADS program. However, the deposit of equity shares may be subject to securities law restrictions and the restriction that the cumulative aggregate number of equity shares that can be deposited as of any time cannot exceed the cumulative aggregate number represented by ADSs converted into underlying equity shares as of such time. These restrictions increase the risk that the market price of our ADSs will be below that of the equity shares.

There is a limited market for the ADSs.

Although our ADSs are listed and traded on the NYSE, any trading market for our ADSs may not be sustained, and there is no assurance that the present price of our ADSs will correspond to the future price at which our ADSs will trade in the public market. Indian legal restrictions may also limit the supply of ADSs. The only way to add to the supply of ADSs would be through an additional issuance. We cannot guarantee that a market for the ADSs will continue.

Conditions in the Indian securities market may affect the price or liquidity of our equity shares and ADSs.

The Indian securities markets are smaller and more volatile than securities markets in more developed economies. The Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed securities. Currently, prices of securities listed on Indian exchanges are displaying signs of volatility linked among other factors to the uncertainty in the global markets and the rising inflationary and interest rate pressures domestically. The governing bodies of the Indian stock exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price movements and margin requirements. Future fluctuations or trading restrictions could have a material adverse effect on the price of our equity shares and ADSs.

Settlement of trades of equity shares on Indian stock exchanges may be subject to delays.

The equity shares represented by our ADSs are listed on the National Stock Exchange of India LimitedNSE and Bombay Stock Exchange Limited.BSE. Settlement on these stock exchanges may be subject to delays and an investor in equity shares withdrawn from the depositary facility upon surrender of ADSs may not be able to settle trades on these stock exchanges in a timely manner.

You may be subject to Indian taxes arising out of capital gains

Generally, capital gains, whether short-term or long-term, arising on the sale of the underlying equity shares in India isare subject to Indian capital gains tax. Investors are advised to consult their own tax advisers and to carefully consider the potential tax consequences of an investment in ADSs. See also “Taxation”“Taxation”.

You may be unable to exercise preemptive rights available to other shareholders.

A company incorporated in India must offer its holders of equity shares preemptive rights to subscribe and pay for a proportionate number of shares to maintain their existing ownership percentages prior to the issuance of any new equity shares, unless these rights have been waived by at least 75.0% of the company’s shareholders present and voting at a shareholders’ general meeting. U.S. investors in our ADSs may be unable to exercise preemptive rights for our equity shares underlying our ADSs unless a registration statement under the Securities Act of 1933 (the “Securities Act”) is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. Our decision to file a registration statement will depend on the costs and potential liabilities associated with any registration statement as well as the perceived benefits of enabling U.S. investors in our ADSs to exercise their preemptive rights and any other factors we consider appropriate at the time. We do not commit to filing a registration statement under those circumstances. If we issue any securities in the future, these securities may be issued to the depositary, which may sell these securities in the securities markets in India for the benefit of the investors in our ADSs. There can be no assurance as to the value, if any, the depositary would receive upon the sale of these securities. To the extent that investors in our ADSs are unable to exercise preemptive rights, their proportional interests in us would be reduced.

Financial difficulty and other problems in certain financial institutions in India could adversely affect our business and the price of our ADSs and equity shares.

We are exposed to the risks of the Indian financial system by being a part of the system. Thesystem which may be affected by the financial difficulties faced by certain Indian financial institutions because the commercial soundness of many financial institutions may be closely related as a result of credit, trading, clearing or other relationships. Such “systemic risk”, may adversely affect financial intermediaries, such as clearing agencies, banks, securities firms and exchanges with which we interact on a daily basis. Any such difficulties or instability of the Indian financial system in general could create an adverse market perception about Indian financial institutions and banks and adversely affect our business. Our transactions with these financial institutions expose us to various risks in the event of default by a counterparty, which can be exacerbated during periods of market illiquidity.

Because the equity shares underlying our ADSs are quoted in rupees in India, you may be subject to potential losses arising out of exchange rate risk on the Indian rupee and risks associated with the conversion of rupee proceeds into foreign currency.

Fluctuations in the exchange rate between the U.S. dollar and the Indian rupee may affect the value of your investment in our ADSs. Specifically, if the relative value of the Indian rupee to the U.S. dollar declines, each of the following values will also decline:

You may not be able to enforce a judgment of a foreign court against us.

We are a limited liability company incorporated under the laws of India. All our directors and members of our senior management and some of the experts named in this report are residents of India and almost all of our assets and the assets of these persons are located in India. It may not be possible for investors in our ADSs to effect service of process outside India upon us or our directors and members of our senior management and experts named in the report that are residents of India or to enforce judgments obtained against us or these persons in foreign courts predicated upon the liability provisions of foreign countries, including the civil liability provisions of the federal securities laws of the United States. Moreover, it is unlikely that a court in India would award damages on the same basis as a foreign court if an action were brought in India or that an Indian court would enforce foreign judgments if it viewed the amount of damages as excessive or inconsistent with Indian practice.

There may be less company information available on Indian securities markets than securities markets in developed countries.

There is a difference between the level of regulation and monitoring of the Indian securities markets and the activities of investors, brokers and other participants and that of markets in the United States and other developed economies. The Securities and Exchange Board of India (SEBI)SEBI and the stock exchanges are responsible for improving disclosure and other regulatory standards for the Indian securities markets. The SEBI has issued regulations and guidelines on disclosure requirements, insider trading and other matters. There may, however, be less publicly available information about Indian companies than is regularly made available by public companies in developed economies.

Foreign Account Tax Compliance Act withholding may affect payments on the equity shares and the ADSs.

Sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) (provisions commonly known as “FATCA” or the Foreign Account Tax Compliance Act) impose (a) certain reporting and due diligence requirements on foreign financial institutions and, (b) potentially require such foreign financial institutions to deduct a 30% withholding tax from (i) certain payments from sources within the United States, and (ii) “foreign passthru payments” (which is not yet defined in current guidance) made to certainnon-U.S. financial institutions that do not comply with such reporting and due diligence requirements or certain other payees that do not provide required information. The United States has entered into a number of intergovernmental agreements (“IGAs”) with other jurisdictions which may modify the operation of this withholding. The Bank as well as relevant intermediaries such as custodians and depositary participants are classified as financial institutions for these purposes. Given that India has entered into a Model 1 IGA with the United States for giving effect to FATCA, Indian financial institutions such as the Bank are also required to comply with FATCA, based on the terms of the IGA and relevant rules made pursuant thereto.

Under current guidance it is not clear whether or to what extent payments on ADSs or equity shares will be considered “foreign passthru payments” subject to FATCA withholding or the extent to which withholding on “foreign passthru payments” will be required under the applicable IGA. Investors should consult their own tax advisers on how the FATCA rules may apply to payments they receive in respect of the ADSs or equity shares.

Should any withholding tax in respect of FATCA be deducted or withheld from any payments arising to any investor, neither the Bank nor any other person will pay additional amounts as a result of the deduction or withholding.

PRICE RANGE OF OUR AMERICAN DEPOSITARY SHARES AND EQUITY SHARES

Our ADSs, each representing three equity shares, par value Rs. 2.0 per equity share, are listed on the NYSE under the symbol “HDB”. Our equity shares, including those underlying the ADSs, are listed on the National Stock ExchangeNSE under the symbol “HDFCBANK” and the Bombay Stock Exchange LimitedBSE under the code 500180. Our fiscal quarters end on June 30 of each year for the first quarter, September 30 for the second quarter, December 31 for the third quarter and March 31 for the fourth quarter.

Trading Prices of Our ADSs on the NYSE

The following table shows: