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erm positions in assets and were highly leveraged - a phenomenon that is pro-cyclical, as asset prices boom, leverage is increased. The use of repurchase agreements, repos, was common and could finance up to approximately 25% of investment banks balance sheets. Short-term repos are refunded daily making them highly reliant on functioning money markets. As long as the world experienced a booming economy with low interest rates and liquid funding markets the system functioned smoothly - but as mortgage holders in the U.S. started to default on their mortgages it sent shockwaves through the entire global financial chain.

The impact of the global crisis on India can broadly be divided into three different aspects: (1) the immediate direct impact on its financial sector; (2) an indirect impact on economic activities; and (3) potential long-term geopolitical implications. Fortunately, India, like most of the emerging economies, was lucky to avoid the first round of adverse affects because its banks were not overly exposed to subprime lending. Only one of the larger private sector banks, the ICICI, was partly exposed but it managed to counter the crisis through a strong balance sheet and timely government action. The banking sector as whole maintained a healthy balance sheet and, over the third quarter of 2008 -a nightmare for many big financial institutions around the world-, India's banks reported encouraging results and witnessed an impressive jump in their profitability.

The present financial crises are more widespread than previous ones, as countries financial systems are deeper connected into each other now than before. The current crisis began in United States when the subprime mortgages defaulted. Financial institutions, which are the key intermediaries in the financial system, faced a systematic risk that froze and decreased the capital in the real economy. The subprime mortgages were designed with an interest payment, whereby the mortgagees were planning to refinance to avoid increased mortgages rates (Acharya and Philippo, 2009).

1.3 Purpose

The aim of this study is to at first acquire and present the necessary knowledge regarding characteristics of financial crises from specific literary theories on the crises. In addition, we will use these literary theories to select economic indicators that will explain the repercussion on the Indian economy as a result of the current financial crisis and its impact on the banking sector. The purpose of this dissertation is to analyze the development and growth of HDFC Bank Ltd during the year 2008 and 2009. We aim to make a broader analysis of the bank and hold an external point of view. The intention is to find the factors adding value to the bank, in terms of products and business advantages. This dissertation is to sort out the key factors behind a successful bank and a highly valued brand in banking industry.

1.4 Research questions

Ø What characterizes a financial crisis according to the literature chosen?

Ø How has HDFC Bank in the current financial crisis enabled to defend a competitive composition within the banking industry?

Ø Will the success continue in the foreseeable future?

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