A Project Report On

MUTUAL FUND AND

BANCASSURANCE

In partial fulfillment of requirements of

Master of Business Administration (2007-09)

Submitted by

RONAK MAKHIJA VRAJESH GANDHI

MBA-I

Submitted to AES PGIBM

Undertaken at

STATE BANK OF INDIA

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ACKNOWLEDGEMENTS Practical knowledge is equally important along with theoritical knowledge in

MBA program. It would not have been possible for us to gain this knowledge had we

not been given such an opportunity by our college. Therefore we begin by thanking

our ALMA MATTER, AES PGIBM for giving us such a wonderful platform to understand

the corporate environment via summer project and join country’s leading bank SBI.

Secondly our many thanks to our respective project guide and also our Branch

Managers Mr. Ravi Mohan (Sabarmati branch) and Mr. K.M. Rathod.( Ranip branch).

Thirdly we would like to express our sincere gratitude to Ms. Falguni Pandya for

helping us out with analysis in this project and reading our revisions to make our

project achieve a competent level. We would also like to thank all the staff members

of our respective branches for helping us to learn different things.

We would also like to extend our heartfelt thanks to the staff and faculty of AES

PGIBM who helped us out in our project by providing various resources that helped us

in the project. Last but not the least we would like to thank Almighty, our family and

all the people who have directly or indirectly helped us in successful completion of the

project.

Vrajesh Gandhi Ronak Makhija

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TABLE OF CONTENTS

CONTENTS PAGE NO.

Acknowledgement -----------

Certificate -----------

Executive Summary 4

Project Outline 5

1. Introduction 6

2. Cross selling 10

3. Mutual Fund 11

4. Origination of Mutual Fund 12

5. Mutual Fund Industry in India 13

6. Benefits and Drawbacks of Mutual Fund 27

7. SBI Mutual Fund 31

8. Bancassurance 38

9. Life Insurance 39

10. Benefits of Life Insurance 41

11. Will Bancassurance click? 43

12. Group Swadhan 45

13. Bancassurance – An Indian Perspective 47

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14. Modus Operandi of Bancassurance 48

15. SWOT analysis of Bancassurance 50

16. Bancassurance-- SBI Life 53

17. Vacation 2008 57

18. Loan 58

19. Questionnaire 65

20. Analysis 67

21. Bibliography 78

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EXECUTIVE SUMMARY The project takes into account the awareness level about Mutual Fund and

Insurance among people of lower and middle class. The analysis of the project has

been done taking into consideration the inputs given by SBI customers residing in

Sabarmati and Ranip areas of Ahmedabad.

The project includes survey regarding awareness level about insurance and

mutual fund among people of lower and middle class, their investment choices, their

choice for various schemes, their knowledge about concept of bancassurance.

It also includes our experience at the vacation 2008 fair, where in addition

to Mutual Fund and Insurance we also marketed other products like Home loan, Car

Loan and Education loan.

Our survey concludes that if proper marketing is done for Mutual Fund and

Insurance there is a huge potential for these sectors. People are still accustomed to

their earlier tradition of investing into Fixed Deposits, Post Office savings. Not many

people were aware of the concept Mutual Fund in the area we surveyed.

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Project outline

Need

Mutual fund and insurance industry have been growing by leaps and bounds

these days. However in spite of this there are still people who are not aware of

benefits provided by Insurance and mutual fund schemes.

Hence it becomes necessary for companies in these sectors to make people

aware of products offered by them to help people take benefit of india’s growth story

through various schemes offered by insurance and mutual funds.

Objective

The objective of this study is

To study the awareness level of mutual fund and insurance among lower and

middle class people

To make people in those areas realize importance of mutual fund and

insurance.

To find out investment choice of people in those areas.

LIMITATIONS Limited time for the project.

Study was limited to only 2 areas

Limited products to offer

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INTRODUCTION

Not many financial institutions

in the world today can claim the antiquity and majesty of the State Bank of India.

Founded nearly two centuries ago with the primary intent of imparting stability to the

money market, the Bank from its inception mobilized funds for supporting both the

public credit of the Company's Governments in the three presidencies of British India

and the private credit of the European and Indian merchants. From about the 1860s,

when the Indian economy took a significant leap forward under the impulse of

quickened world communications and ingenious methods of industrial and agricultural

production, the Bank became intimately involved in the financing of practically every

trading, manufacturing and mining activity of the sub-continent. Although large

European and Indian merchants and manufacturers were undoubtedly the principal

beneficiaries, the 'small man' was never ignored as loans as low as Rs.100 were

disbursed in agricultural districts against gold ornaments. Added to these the Bank till

the creation of the Reserve Bank in 1935 carried out numerous central-banking

functions.

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Adaptation to a changing world

and the needs of the hour has been one of the strengths of the Bank. In the post-

Depression era, for instance, when business opportunities became extremely

restricted, rules laid down in the book of instructions were relaxed to ensure that

good business did not go past. Yet seldom did the Bank contravene its rules or depart

from sound banking principles to retain or expand its business. An innovative array of

offices, unknown to the world then, was devised in the form of branches, sub-

branches, treasury pay-offices, pay offices, sub-pay offices and outstations to exploit

the opportunities of an expanding economy. New business strategies were also

evolved way back in 1937 to render the 'best banking service' through 'prompt and

courteous' attention to customers.

A highly efficient and experienced management, functioning in a well-defined

organizational structure, did not take long to place the Bank on an exalted pedestal in

the areas of business, profitability, internal discipline and above all credibility. An

impeccable financial status, consistent maintenance of the lofty traditions of banking

and observance of a high standard of integrity in its operations helped the Bank gain

a pre-eminent status.

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No wonder the admiration

for the Bank was universal as key functionaries of the India Office and Government of

India, successive finance ministers of independent India, Reserve Bank governors and

representatives of the chambers of commerce showered encomiums on it.

The CNN IBN, Network 18 recognized this momentous transformation journey, the

State Bank of India is undertaking, and has awarded the prestigious Indian of the

Year – Business, to its Chairman, Mr. O. P. Bhatt in January 2008.

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BANKING SUBSIDAIRIES

State Bank of Bikaner and Jaipur (SBBJ)

State Bank of Hyderabad (SBH)

State Bank of Indore (SBIr)

State Bank of Mysore (SBM)

State Bank of Patiala (SBP)

State Bank of Saurashtra (SBS)

State Bank of Travancore (SBT)

FOREIGN SUBSIDAIRIES

State bank of India International (Mauritius) Ltd.

State Bank of India (California).

State Bank of India (Canada).

INMB Bank Ltd, Lagos

NON-BANKING SUBSIDAIRIES

SBI Capital Markets Ltd (SBICAP)

SBI Funds Management Pvt Ltd (SBI FUNDS)

SBI DFHI Ltd (SBI DFHI)

SBI Factors and Commercial Services Pvt Ltd (SBI FACTORS)

SBI Cards & Payments Services Pvt. Ltd. (SBICPSL

JOINT VENTURES

SBI Life Insurance Company Ltd (SBI LIFE).

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CROSS SELLING

The word ‘cross selling’ here, refers to the activities done by the bank apart from its

core banking. This facility makes the bank a diversified financial products provider

which offers a wide range of insurance policies, ULIPs, mutual funds and SBI card

facility.

SBI CROSS SELLING The State Bank of India offers a bouquet of the best financial and insurance solutions

in addition to its vast array of banking products. The bank has leveraged its pan India

network as a Corporate Agent to offer products in life insurance, general insurance,

mutual funds and credit cards of the following companies:

Life Insurance

SBI Life Insurance Co

General Insurance

New India Assurance Co.

Mutual Funds

SBI Mutual Funds

UTI Mutual Funds

Franklin Templeton Mutual Funds

Tata Mutual Funds

Fidelity Mutual Funds

Credit Cards SBI Cards & Payment Services Ltd.

SBI premium card

SBI gold and more card

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MUTUAL FUND

CONCEPT A Mutual Fund is a trust that pools the savings of a number of investors who share a

common financial goal. The money thus collected is then invested in capital market

instruments such as shares, debentures and other securities. The income earned

through these investments and the capital appreciation realized is shared by its unit

holders in proportion to the number of units owned by them. Thus a Mutual Fund is

the most suitable investment for the common man as it offers an opportunity to

invest in a diversified, professionally managed basket of securities at a relatively low

cost. The flow chart below describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

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ORIGINATION When three Boston securities executives pooled their money together in 1924 to

create the first mutual fund, they had no idea how popular mutual funds would

become.

The idea of pooling money together for investing purposes started in Europe in the

mid-1800s. The first pooled fund in the U.S. was created in 1893 for the faculty and

staff of Harvard University. On March 21st, 1924 the first official mutual fund was

born. It was called the Massachusetts Investors Trust.

After one year, the Massachusetts Investors Trust grew from $50,000 in assets in

1924 to $392,000 in assets (with around 200 shareholders). In contrast, there are

over 10,000 mutual funds in the U.S. today totaling around $7 trillion (with

approximately 83 million individual investors) according to the Investment Company

Institute.

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MUTUAL FUNDS INDUSTRY IN

INDIA

The origin of mutual fund industry in India is with the introduction of the concept of

mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated

from the year 1987 when non-UTI players entered the industry.

In the past decade, Indian mutual fund industry had seen dramatic improvements,

both quality wise as well as quantity wise. Before, the monopoly of the market had

seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The

private sector entry to the fund family raised the AUM to Rs. 470 bn in March 1993

and till April 2004; it reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is

less than the deposits of SBI alone. The main reason of its poor growth is that the

mutual fund industry in India is new country. Large sections of Indian investors are

yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast

of selling.The mutual fund industry can be broadly put into four phases according to

the development of the sector. Each phase is briefly described as under. in the

First Phase - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set

up by the Reserve Bank of India and functioned under the Regulatory and

administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from

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the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory

and administrative control in place of RBI.

Second Phase - 1987-1993 (Entry of Public Sector Funds)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Can bank

Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank

Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92).

LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under

management.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual

fund industry, giving the Indian investors a wider choice of fund families. Also, 1993

was the year in which the first Mutual Fund Regulations came into being, under which

all mutual funds, except UTI were to be registered and governed. The erstwhile

Kothari Pioneer (now merged with Franklin Templeton) was the first private sector

mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive

and revised Mutual Fund Regulations in 1996. The industry now functions under the

SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual

funds setting up funds in India and also the industry has witnessed several mergers

and acquisitions. As at the end of January 2003, there were 33 mutual funds with

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total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44,541 crores of

assets under management was way ahead of other mutual funds.

Fourth Phase - since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate entities.

One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835

crores (as on January 2003). The Specified Undertaking of Unit Trust of India,

functioning under an administrator and under the rules framed by Government of

India and does not come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is

registered with SEBI and functions under the Mutual Fund Regulations. With the

bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores

of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual

Fund Regulations, and with recent mergers taking place among different private

sector funds, the mutual fund industry has entered its current phase of consolidation

and growth. As at the end of September, 2004, there were 29 funds, which manage

assets of Rs.153108 crores under 421 schemes

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PERFORMANCE OF MUTUAL FUND IN INDIA Let us start the discussion of the performance of mutual funds in India from the day

the concept of mutual fund took birth in India. The year was 1963. Unit Trust of India

invited investors or rather to those who believed in savings, to park their money in

UTI Mutual Fund.

For 30 years it goaled without a single second player. Though the 1988 year saw

some new mutual fund companies, but UTI remained in a monopoly position.

The performance of mutual funds in India in the initial phase was not even closer to

satisfactory level. People rarely understood, and of course investing was out of

question. But yes, some 24 million shareholders was accustomed with guaranteed

high returns by the begining of liberalization of the industry in 1992. This good record

of UTI became marketing tool for new entrants. The expectations of investors

touched the sky in profitability factor. However, people were miles away from the

praparedness of risks factor after the liberalization.

The Assets Under Management of UTI was Rs. 67bn. by the end of 1987. Let me

concentrate about the performance of mutual funds in India through figures. From

Rs. 67bn. the Assets Under Management rose to Rs. 470 bn. in March 1993 and the

figure had a three times higher performance by April 2004. It rose as high as Rs.

1,540bn.

The net asset value (NAV) of mutual funds in India declined when stock prices started

falling in the year 1992. Those days, the market regulations did not allow portfolio

shifts into alternative investments. There was rather no choice apart from holding the

cash or to further continue investing in shares. One more thing to be noted, since

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only closed-end funds were floated in the market, the investors disinvested by selling

at a loss in the secondary market.

The performance of mutual funds in India suffered qualitatively. The 1992 stock

market scandal, the losses by disinvestments and of course the lack of transparent

rules in the whereabouts rocked confidence among the investors. Partly owing to a

relatively weak stock market performance, mutual funds have not yet recovered, with

funds trading at an average discount of 1020 percent of their net asset value.

The supervisory authority adopted a set of measures to create a transparent and

competitive environment in mutual funds. Some of them were like relaxing

investment restrictions into the market, introduction of open-ended funds, and paving

the gateway for mutual funds to launch pension schemes.

The measure was taken to make mutual funds the key instrument for long-term

saving. The more the variety offered, the quantitative will be investors.

At last to mention, as long as mutual fund companies are performing with lower risks

and higher profitability within a short span of time, more and more people will be

inclined to invest until and unless they are fully educated with the dos and donts of

mutual funds.

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MUTUAL FUND COMPANIES IN INDIA The concept of mutual funds in India dates back to the year 1963. The era between

1963 and 1987 marked the existence of only one mutual fund company in India with

Rs.67bn assets under management (AUM), by the end of its monopoly era, the Unit

Trust of India (UTI). By the end of the 80s decade, few other mutual fund companies

in India took their position in mutual fund market.

The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank

Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of

India Mutual Fund.

The succeeding decade showed a new horizon in indian mutual fund industry. By the

end of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector

funds started penetrating the fund families. In the same year the first Mutual Fund

Regulations came into existance with re-registering all mutual funds except UTI. The

regulations were further given a revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in India which has

now merged with Franklin Templeton. Just after ten years with private sector players

penetration, the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual

fund companies in India.

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MAJOR MUTUAL FUND COMPANIES IN INDIA

ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India)

Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India)

Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of

ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life

Financial. Sun Life Financial is a golbal organisation evolved in 1871 and is being

represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart

from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to

investment. Recently it crossed AUM of Rs. 10,000 crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund)

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992

under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited

is the AMC of BOB Mutual Fund and was incorporated on November 5, 1992.

Deutsche Bank AG is the custodian.

HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsor namely Housing

Development Finance Corporation Limited and Standard Life Investments Limited.

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HSBC Mutual Fund

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital

Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund

acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund

ING Vysya Mutual Fund was setup on February 11, 1999 with the same named

Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment

Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the

largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was

setup on 13th of October, 1993 with two sponsor, Prudential Plc. and ICICI Ltd. The

Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential

ICICI Asset Management Company Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial

Corporation Ltd. as the sponsor. Sahara Asset Management Company Private Limited

incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-

up capital of the AMC stands at Rs 25.8 crore.

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State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch

offshor fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately.

Today it is the largest Bank sponsored Mutual Fund in India. They have already

launched 35 Schemes out of which 15 have already yielded handsome returns to

investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM.

Now it has an investor base of over 8 Lakhs spread over 18 schemes.

Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers

for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The

investment manager is Tata Asset Management Limited and its Tata Trustee

Company Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the

country with more than Rs. 7,703 crores (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is

presently having more than 1,99,818 investors in its various schemes. KMAMC

started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes

catering to investors with varying risk - return profiles. It was the first company to

launch dedicated gilt scheme investing only in government securities.

Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in Jan 14, 2003,

manages the UTI Mutual Fund with the support of UTI Trustee Company Privete

Limited. UTI Asset Management Company presently manages a corpus of over

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Rs.20000 Crore. The sponsorers of UTI Mutual Fund are Bank of Baroda (BOB),

Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance

Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds, Income

Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882.

The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co.

Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual

Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for

launching of various schemes under which units are issued to the Public with a view

to contribute to the capital market and to provide investors the opportunities to make

investments in diversified securities.

Standard Chartered Mutual Fund

Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by

Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt.

Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was

incorporated with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund

The group, Frnaklin Templeton Investments is a California (USA) based company with

a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial

services groups in the world. Investors can buy or sell the Mutual Fund through their

financial advisor or through mail or through their website. They have Open end

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Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid

schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes,

Closed end Income schemes and Open end Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and its leading in the

market in securities, investmenty management and credit services. Morgan Stanley

Investment Management (MISM) was established in the year 1975. It provides

customized asset management services and products to governments, corporations,

pension funds and non-profit organisations. Its services are also extended to high net

worth individuals and retail investors. In India it is known as Morgan Stanley

Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley

Mutual Fund (MSMF). This is the first close end diversified equity scheme serving the

needs of Indian retail investors focussing on a long-term capital appreciation.

Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited as its

sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was

incorporated on December 1, 1995 with the name Escorts Asset Management

Limited.

Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital

Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM Trust

Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd.

with the corporate office in Mumbai.

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Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services

Pvt. Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee

Company. Incorporated on October 16, 2000 and headquartered in Mumbai,

Benchmark Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund

Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as

the sponsor. Canbank Investment Management Services Ltd. incorporated on March

2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai.

Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance

Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the

Trustee Company.

LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It

contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was

constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882.

The Company started its business on 29th April 1994. Company Ltd as the

Investment Managers for LIC Mutual Fund.

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a

Government of India undertaking and the four Public Sector General Insurance

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Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd.

(NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII)

and is constituted as a Trust in accordance with the provisions of the Indian Trusts

Act, 1882.

TOTAL ASSES UNDER MANAGEMENT

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TYPES OF MUTUAL FUND SCHEMES IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial

position, risk tolerance and return expectations etc. The table below gives an

overview into the existing types of schemes in the Industry.

TYPES OF MUTUAL FUND SCHEMES

• By Structure

o Open - Ended Schemes

o Close - Ended Schemes

o Interval Schemes

• By Investment Objective

o Growth Schemes

o Income Schemes

o Balanced Schemes

o Money Market Schemes

• Other Schemes

o Tax Saving Schemes

o Special Schemes

Index Schemes

Sector Specific Schemes

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BENEFITS OF INVESTING IN MUTUAL FUNDS

Diversification: The best mutual funds design their portfolios so individual

investments will react differently to the same economic conditions. For example,

economic conditions like a rise in interest rates may cause certain securities in a

diversified portfolio to decrease in value. Other securities in the portfolio will

respond to the same economic conditions by increasing in value. When a

portfolio is balanced in this way, the value of the overall portfolio should

gradually increase over time, even if some securities lose value.

Professional Management: Most mutual funds pay topflight professionals to

manage their investments. These managers decide what securities the fund will

buy and sell.

Regulatory oversight: Mutual funds are subject to many government

regulations that protect investors from fraud.

Liquidity: It's easy to get your money out of a mutual fund. Write a check,

make a call, and you've got the cash.

Convenience: You can usually buy mutual fund shares by mail, phone, or over

the Internet.

Low cost: Mutual fund expenses are often no more than 1.5 percent of your

investment. Expenses for Index Funds are less than that, because index funds

are not actively managed. Instead, they automatically buy stock in companies

that are listed on a specific index

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Transparency: Mutual fund companies regularly show the amount invested in

various sectors and also stocks. This helps investors to know where their money

is invested.

Flexibility: Investors have the choice of switching to other funds in case of open

ended funds.

Choice of schemes: Many companies in India have floated mutual fund

schemes. This gives investor’s lot options to choose from.

Tax benefits: Almost all the companies have floated Tax saving schemes. SBI

MAGNUM TAX FUND for example, this gives investors a chance to escape tax on

their investment

DRAWBACKS OF MUTUAL FUND:

No Guarantees: No investment is risk free. If the entire stock market declines in

value, the value of mutual fund shares will go down as well, no matter how

balanced the portfolio. Investors encounter fewer risks when they invest in mutual

funds than when they buy and sell stocks on their own. However, anyone who

invests through a mutual fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-

day expenses. Some funds also charge sales commissions or "loads" to compensate

brokers, financial consultants, or financial planners. Even if you don't use a broker

or other financial adviser, you will pay a sales commission if you buy shares in a

Load Fund.

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Management risk: When you invest in a mutual fund, you depend on the fund's

manager to make the right decisions regarding the fund's portfolio. If the manager

does not perform as well as you had hoped, you might not make as much money on

your investment as you expected.

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MUTUAL FUND- ORGANISATION

There are many entities involved and the diagram below illustrates the

organizational set up of a mutual fund:

Organisation of a Mutal Fund

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SBI MUTUAL FUND SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable

track record in judicious investments and consistent wealth creation. The fund traces its lineage to SBI - India’s largest banking enterprise. The institution

has grown immensely since its inception and today it is India's largest bank,

patronised by over 80% of the top corporate houses of the country.

SBI Mutual Fund is a joint venture between the State Bank of India and Société

Générale Asset Management, one of the world’s leading fund management companies

that manages over US$ 330 Billion worldwide.

In eighteen years of operation, the fund has launched thirty-two schemes and

successfully redeemed fifteen of them. In the process it has rewarded it’s investors

handsomely with consistently high returns.

A total of over 20,00,000 investors have reposed their faith in the wealth generation

expertise of the Mutual Fund.

Schemes of the Mutual fund have consistently outperformed benchmark indices and

have emerged as the preferred investment for millions of investors and HNI’s.

Today, the fund manages over Rs. 13,000 crores of assets and has a diverse profile

of investors actively parking their investments across 28 active schemes.

The fund serves this vast family of investors by reaching out to them through

network of 82 collection branches, 26 investor service centres, 21 investor service

desks and 21 district organisers.

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SBI Mutual is the first bank-sponsored fund to launch an offshore fund – Resurgent

India Opportunities Fund .

Growth through innovation and stable investment policies is the SBI MF credo.

VARIOUS SCHEMES OF SBI MF

Open Ended

SBI Arbitrage Opportunities Fund

SBI Magnum Balanced Fund

SBI Magnum Blue Chip Fund

SBI Magnum Children's Benefit Plan

SBI Magnum COMMA Fund

SBI Magnum Contra Fund

SBI Magnum Emerging Businesses Fund

SBI Magnum Equity Fund

SBI Magnum FMCG Fund

SBI Magnum Gilt Fund Long Term Plan

SBI Magnum Gilt Fund Short Term Plan

SBI Magnum Global Fund

SBI Magnum Income Fund

SBI Magnum Income Plus Fund Investment Plan

SBI Magnum Income Plus Fund Saving Plan

SBI Magnum Index Fund

SBI Magnum Insta Cash Fund

SBI Magnum Institutional Income Fund

33

SBI Magnum IT Fund

SBI Magnum Midcap Fund

SBI Magnum Monthly Income Plan

SBI Magnum Monthly Income Plan Floater

SBI Magnum Multicap Fund

SBI Magnum Multiplier Plus

SBI Magnum NRI Investment Fund

SBI Magnum NRI Investment Fund Flexi Asset Plan

SBI Magnum Pharma Fund

SBI Magnum Tax Gain Scheme 1993

SBI Premier Liquid Fund

Close Ended

SBI ONE India Fund

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AWARDS AND ACHIEVEMENTS

35

36

TERMS USED

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme minus its liabilities.

The per unit NAV is the net asset value of the scheme divided by the number of units

outstanding on the Valuation Date.

Sale Price

Is the price you pay when you invest in a scheme. Also called Offer Price. It may

include a sales load.

Repurchase Price

Is the price at which a close-ended scheme repurchases its units and it may include a

back-end load. This is also called Bid Price.

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Redemption Price

Is the price at which open-ended schemes repurchase their units and close-ended

schemes redeem their units on maturity. Such prices are NAV related.

Sales Load

Is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’

load. Schemes that do not charge a load are called ‘No Load’ schemes.

Repurchase or ‘Back-end’ Load

Is a charge collected by a scheme when it buys back the units from the unit holders.

TOP 10 MUTUAL FUND COMPANIES IN INDIA

1. Reliance Regular Savings Equity (G)

2. ICICI Pru Infrastructure (G)

3. Kotak Opportunities Fund (G)

4. DSP-ML India T.I.G.E.R -RP (G)

5. Standard Chartered Premier Equity

6. Tata Infrastructure Fund (G)

7. Birla Frontline Equity (G)

8. Sundaram BNP Paribas Select Focus (G)

9. HDFC Growth Fund (G)

10. Principal Global Oppor (G)

Source: policydeal.in

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BANCASSURANCE

Bancassurance is the selling of insurance (assurance) products by a bank.

The usage of the word picked up as banks and insurance companies merged and

banks sought to provide insurance, especially in markets that have been liberalized

recently. It is a controversial idea, and many feel it gives banks too great a control

over the financial industry.

Privatbancassurance is a wealth management process pioneered by Lombard

International Assurance and now used globally. The concept combines private

banking and investment management services with the sophisticated use of life

assurance as a financial planning structure to achieve fiscal advantages and security

for wealthy investors and their families.

Bancassurance provides various advantages to banks, insurers and the customers.

For the banks, income from bancassurance is the only non interest based income.

Interest is market driven and fluctuating and quite narrowing these days. Banks do

not get great margins because of the competition This is why more and more banks

are getting into bancassurance so as to improve their incomes. Increased competition

also makes it difficult for banks to retain their customers. Banassurance comes as a

help in this direction also. Providing multiple services at one place to the customers

means enhanced customer satisfaction. For example, through bancassurance a

customer gets home loans along with insurance at one single place as a combined

product. Another important advantage that bancassurance brings about in banks is

development of sales culture in their employees.

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LIFE INSURANCE

You think twice before taking the plunge into buying insurance. Is buying insurance a

necessity now? Spending an 'extra' amount as premium at regular intervals where

you do not see immediate benefits does not seem a necessity at the moment. May be

later.

Well you could be wrong. Buying Insurance cannot be compared with any other form

of investment. Insurance gives you a life long benefit and the returns will definitely

come but only when you need it the most i.e at the right time. Besides buying

insurance early in life is one of the wise decisions you could take. Because the

premium you would be paying would be comparatively lower.

Insurance is not about how much more it can offer you when the stock market is at

its peak.

It may not be an attractive investment option. But weigh the pros and cons and

consider how much more it offers at a small price. Most important of all it provides

you with that unique sense of security that no other form of investment provides. It

gives you a sense of financial support especially during that time of crisis irrespective

of the fluctuations in the stock market. Insurance provides for your career goals right

from your childhood years.

If the earning member of the family is no more your child's educational needs will not

suffer. In fact his higher education too will be provided for. You need not spend

sleepless nights thinking about how to save for your child's marriage. Life Insurance

will take care of that typical once-in-a-life-time spending on marriages.

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An accident or a disability may be devastating but an insurance policy can be of

utmost support for the family during such times too. Besides it provides for additional

benefits such as bonuses. You need not worry about your retirement years. The rising

prices, taxes, and your lifestyle will be taken care of easily. And you can relax and

spend your old age in comfort and peace.

WHAT DOES LIFE INSURANCE HAVE TO OFFER?

Life insurance is many different things to many different people. For some, it is a

premium to be paid on time. For others it offers liquidity since cash can be borrowed

when needed. For the investment-minded, it denotes a constantly growing capital

account and numerous other benefits.

Life insurance is nothing but the creation of capital funds on an installment basis.

Only here, the results are guaranteed. Life insurance is basically a property that is

bought under a contract, accompanied by contractual guarantees that ensure large

sums of money at the death of the insured.

The contractual guarantee is the promise to pay, backed by one of the oldest and

most stably regulated financial industry operating in the Indian sub-continent today.

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BENEFITS OF INSURANCE CAN BE LISTED AS FOLLOWS

Insurance Buys Time and Money

People like to refer to life insurance as time insurance, the reason being that life

insurance proceeds are paid to the insured's beneficiaries in case of death. The

money proffered by life insurance helps buy time to adjust to the change of

circumstances. Insurance provides large amounts of cash that will keep the lifestyle

for the survivors the way it was before the insured's death.

Insurance Offers Peace of Mind

For the person who buys an insurance policy, it offers absolute and complete peace of

mind. He or she knows that the decision made by him will provide sound benefits in

the future, whether or not the individual may live to see it. The life insurance policy

will subsequently prove this in the future if and when funds are needed. This is the

guarantee of the insurance contract.

Multiple Applications

The future is uncertain for each and every one. No one knows how long he or she will

live. The investment benefit is paid to the insured's beneficiaries after his death or it

can be used during the life as well. Life insurance policy owners can turn to the cash

value of the policy in case of a financial emergency when all avenues are either

blocked or denied. They know that they can avail of loans based on their insurance

policies.

Insurance policy owners can use the cash value of their policies to meet their long-

term financial needs as well. They may have purposefully invested in insurance to use

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the cash in the policy for their children's future marriage expenses or higher

education fees.

Enduring Elasticity

Since life insurance is flexible enough to serve several needs, the insured can keep

several long-term goals in mind once he or she invests in the insurance plan. The

cash value of the policy can be allocated towards augmenting the monthly income

during the retirement years. Leisure years should be turned into pleasure years.

Permanent life insurance is designed on the concepts of long-term flexibility.

Financial Security

The insurance policy offers contractual guarantees to people looking for peace of

mind when they buy life insurance. Life insurance offers complete financial security.

The purchase of life insurance demonstrates concern for a family's future financial

well being.

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WILL BANCASURANCE CLICK?

Bancassurance, the much talked about channel of insurance distribution through

banks that originated in France and which has been a success story in Europe is yet

to take off here. A number of insurers have already tied up with banks and some

banks have already flagged off bancassurance through soft launches of select risk

products. While reams have been written about the numerous benefits of

bancassurance considering the wide scale availability of risk products it will enable,

rules and regulations regarding the same are yet to fall in place.

Fee based income:

For banks, bancassurance would mean a major gain. Since interest rates have been

falling and profit on off take of credit has been low all banks have been able to do is

sustain themselves but not profit much. Enter bancassurance and fee based income

through hawking of risk products would be guaranteed.

Unique strategies:

Before taking the plunge, banks as also insurers need to work hard on chalking out

strategies to sell risk products through this channel especially in an emerging market

as ours. Through tie-ups some insurers plan to buy shelf space in banks and sell

insurance to those who volunteer to purchase them. But unless banks set up a

trained task force that will focus on hard-selling risk products, making much headway

is difficult especially with a financial product that is not so easily bought over the

counter.

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Identifying Target audience:

Besides, identifying the target audience is yet another important aspect. Banks have

a large depositor base of corporate as well as retail clients they can tap. Talking of

retail clients the lower end and middle-income group customers constitute a major

chunk who have over a period of time built a good rapport with the bank staff and

thus hold big potential for bancassurance.

Reduced costs:

While products such as retirement planning will involve an elaborately worked out

plan with the help of a financial advisor, simple products such as an accident cover in

other words pure risk products will be sold through this channel enabling savings on

solicitation costs of these products. So will insurers pass on a part of the gains on

cost saving (saving on agent training etc) to customers? At present insurers are non-

committal on this one. Also there are no immediate plans to redesign products to suit

the bancassurance channel but banks are gung-ho about cross-selling products.

Legal issues:

Conversely, the Insurance Regulatory Development Authority (IRDA) has adopted a

cautious approach before Bancassurance is flagged off. While on the one hand it is an

economical proposition to sell risk products through the numerous bank branches

spread across the country the fact that claim settlement disputes take an unusually

long time in our country is one of the causes for worry. In such a situation will banks

be in a position to fight for the cause of their clients is a major concern.

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GROUP SWADHAN SBI Life - Swadhan (Group) is a Non Participating Group Term Insurance Plan with

Return of Premium. It is a simple and easy solution which offers dual benefits of life

cover protection in the event of death and refund of premium in case of survival up to

the end of the cover term.

It is the policy on which we have worked during our training session at State Bank of

India, Rajkot.

BASIC DESCRIPTION

Product name: SWADHAN GROUP

Eligibility: SBI Customers ( including NRI ) AGE: Between 18 to 50 years old

(as on last birthday)

Term of cover: 10 years

Life cover: Rs. 50,000

Rs. 1,00,000

Rs. 3,00,000

Rs. 5,00,000 (only available for age 18 to 39)

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Key Features

Eminently affordable premium rates

Complete protection during cover term

Refund of part/full basic premiums paid, depending on the Term of insurance

Cover

Choice with regard to Term of Insurance Cover and Sum Assured

Flexibility to choose appropriate premium payment modes

Simple and convenient joining process

Hassle free and efficient claims settlement

BENEFITS

Key benefits

No medical

Insurance practically free

Tax exemption for premium paid under Sec 80 C

Tax free death/maturity Benefits under Sec 10 (10D)

Maturity benefits: Total basic premium amount (100%) is refundable at

maturity

Death benefits: Sum assured payable lump sum

Exclusions:

Death due to natural causes within the first 45 days from cover start

date.

Death due to suicide within one year from cover start date.

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BANCASSURANCE : AN INDIAN PERSPECTIVE

As for the insurance company the advantage that bancassurance provides is evident.

The insurance company gets improved geographical reach without additional costs. In

India around 67,000 branches are there for PSU banks alone. If all 67,000 branches

sell the insurance products one can see the reach. This is one method of penetrating

the market.

There is also another method called 'Bank Referral'. Here the banks do not issue the

policies, they only give the database to the insurance companies. The companies

issue the policies and pay the commission to them. That is called referral basis.

India's rural market has huge potential that is still untapped by the insurance

companies. Setting up their own networks entails such a huge cost, that no company

would be interested in doing so. Bancassurance again comes as an answer. It helps

the insurance companies to tap the market at a much lower cost. As for the customer

the competitive nature of the Indian market ensures that the reduction in costs would

result in benefits in terms of lower premium rates being passed on to him.

The penetration level of life insurance in the Indian market is abysmally low at 2.3%

of GDP with only 8% of the total population currently insured. With almost half of the

population likely to be in the 'wage earner' bracket by 2010, there is every reason to

be optimistic that bancassurance in India will play a long inning.

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MODUS OPERANDI OF BANCASSURANCE

There are various models through which bancassurance operates internationally. In

the so called integrativemodel, branch bankers themselves directly sell insurance

products. In the specialist model, specialised personnel of the bank or the insurance

company have specific knowledge and training of insurance to sell these

products.Bancassurance could operate through ‘strategic alliance’ models involving

asimple ‘marketing’ tie-up or through ‘full integration’ where the bank sells insurance

products under its own brand and undertakes all other functions associated with

insurance.In India, this scheme, until now, operates largely through strategic

alliances or joint ventures. Under RBI regulations,

the maximum equity that a bank can hold in JV with an insurance company is 50 per

cent, subject to the fact that bank has a net worth of Rs 500 crore, its Capital

adequacy

ratio is 10 per cent or more and has a reasonable level ofnon performing assets. The

Insurance Regulatory and Development Authority also sets guidelines regarding

eligibility of corporate agents. Banking personnel who sell insurance products have to

satisfy the same training and examination requirements as insurance agents.

In India the concept of bancassurance appears to be gaining ground quite rapidly

both through commission based arrangements and joint ventures between banks

and insurance companies.

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WHY INSURERS ARE TURNING TO BANKS?

One of the key factors is that banks continue to command the highest trust among

Indiansavers and investors and of the total pool of financial savings of households, 3

per cent (the largest share) goes to bank deposits (RBI annual Report 2002).

For any providers of new financial products, banks are the fastest and most ‘trusted’

channel to reach households. Besides, the bank branch network of 62000 is virtually

impossible to replicate and would be indispensable in penetrating newer markets such

as rural markets. Bank assurance also leads to a significant lowering of distribution

costs for insurers.

Swiss Re estimates for the UK for instance peg average costs through bank assurance

atroughly 25 per cent of the cost of selling through a direct sales force. The cost

reduction is the corollary of a sharp rise in the numbers of policies sold per employee

that follows from enhanced customer access that bancassurance fosters.Why insurers

areturning to banks?

Bancassurance addresses twin needs of portfolio diversification by retail customers

andintegration of marketing.

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SWOT ANALYSIS OF BANCASSURANCE On order to implement the bancassurance model in our country a lot of steps we have to taken. (A) Top professionals will have to be hired. (B) We have to study the Indians nature regarding insurance. (C) Study about lower middle as well as upper class of society & how much they are eager to adopt insurance. (D) Favorable & easy policies for the people. (E) High capital investment in infrastructure development particularly in Information Technology & Telecommunication is required (F) Creation of research & development cell is very important & adaptive task. (G) We have to study about the SWOP analysis of world in the field of bancassurance & we can take this study as base. Advantages of Banassurance: Bancassurance is a tool, which is beneficial to bank, customer & Insurer at a time. There are certain benefits of bancassurance are given. (1) From the banks point of view: - (A) By selling the insurance product by their own channel the banker can increase their income. (B) Banks have face-to-face contract with their customers. They can directly ask them to take a policy. And the banks need not to go any where for customers. (C) The Bankers have extensive experience in marketing. They can easily attract customers & non-customers because the customer & non-customers also bank on banks. (D) Banks are using different value added services life-E. Banking tele banking, direct mail & so on they can also use all the above-mentioned facility for Bankassurance purpose with customers & non-customers.

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(2) From the Insurer Point of view:

(A) The Insurance Company can increase their business through the banking

distribution channels because the banks have so many customers.

(B) By cutting cost Insurers can serve better to customers in terms lower premium

rate and better risk coverage through product diversification.

(3) From the customers' point of view: Product innovation and distribution

activities are directed towards the satisfaction of needs of the customer.

Bancassurance model assists customers in terms of reduction price, diversified

product quality in time and at their doorstep service by banks.

CONCLUSION

With the opening up of insurance sector and with so many players entering the Indian

Insurance Industry it is required by Insurance Companies to come up with well

established infrastructure facilities with good call centre service to attract and provide

information to customer regarding different good policies & their premium pay

scheme.

The life Insurance Industry in India has been progressing at a rapid growth since

opening up of the sector. The size of country, a diverse set of people combined with

problems of connectivity in rural areas, makes insurance selling in India is a very

difficult task. Life Insurance Companies require good distribution strength and

tremendous man power to reach out such a huge customer base.

Where legislation ahs allowed bancassurance had mostly been a phenomenal success

and although slow to gain pace, is now taking of across Asia, especially now that

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banks are starting to become more diverse financial institution and the concept of

universal banking is being adopted.

In the field of bancassurance banks will bring a customer database, leverage their

name, recognition & reputation of both local and regional levels.

If they are using personal contact with customers and non-customers then only they

can success in the field of bancassurance.

But the proper implementation of bancassurance is still facing so many hurdles

because of poor manpower management, lack of call centers, no personal contact

with customers, inadequate incentives to agents and unfullfilment of other essential

requirements.

Finally we can say that the bancassurance would mostly depend on how well insurers

and bankers understanding is with each other and how they are capturing the

opportunity and how better service they are providing to their, customers. Let us you

all pay more attention towards the policies and enjoy the service provide by banks

and Insurance Companies by the mode of Bancassurance.

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BANCASSURANCE BOOST FOR SBI LIFE

SBI Life Insurance posted a net profit of Rs 34 crore for the financial year ended March 31, 2008, in its

third consecutive year of profitable operations.

While the private insurer grew premium collections by 92% to Rs 5,622 crore in

2007-08, the new business premium grew 87% to Rs 4,792 crore.

SBI Life is also readying itself for an initial public offer sometime later this year, once

market conditions turn conducive.

"The growth in bancassurance by 108% over the last one year has contributed

significantly to the growth of SBI Life Insurance . SBI has done almost Rs 1,600 crore

of premium in 2007-08 in bancassurance from about Rs 800 crore the previous year.

In fact, the branches selling SBI Life products have started functioning on their own

momentum."

The life insurer has greater hopes from this channel. "Currently, bancassurance

contributes to 38% of the total premium and the target is to increase its share to

50% in the coming years.

SBI Life says that its products are currently available at over 10,000 of the 14,000

branches of the State Bank of India and its affiliate banks. The bancassurance model

is the company's key distribution channel and contributes about 40 per cent of the

total premium collection.

SBI Life Insurance, with an authorised capital of Rs500 crore, is a 74 : 26 joint

venture between the State Bank of India and Cardif SA of France, a wholly owned

subsidiary of BNP Paribas.

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LIFE INSURERS

HDFC Standard Life Insurance Company Ltd.

Max New York Life Insurance Co. Ltd.

ICICI Prudential Life Insurance Company Ltd.

Kotak Mahindra Life Insurance Co. Ltd.

Birla Sun Life Insurance Company Ltd.

Tata AIG Life Insurance Company Ltd.

SBI Life Insurance Company Limited .

ING Vysya Life Insurance Company Private Limited

Dabur CGU Life Insurance Company Pvt. Ltd.

AMP SANMAR Assurance Company Ltd.

Dabur CGU Life Insurance Company Pvt. Ltd.

GENERAL INSURERS

Royal Sundaram Alliance Insurance Company Limited

Reliance General Insurance Company Limited.

IFFCO Tokio General Insurance Co. Ltd

TATA AIG General Insurance Company Ltd.

Bajaj Allianz General Insurance Company Limited

ICICI Lombard General Insurance Company Limited.

Cholamandalam General Insurance Company Ltd.

Export Credit Guarantee Corporation Ltd.

HDFC-Chubb General Insurance Co. Ltd.

PRODUCTS OFFERED BY SBI LIFE

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INDIVIDUAL PRODUCTS

SBI Life - Horizon II

SBI Life - Unit Plus II

SBI Life - Unit Plus Child Plan

SBI Life - Unit Plus Elite Plan

SBI Life - Horizon II Pension

SBI Life - Unit Plus II Pension

SBI Life - Lifelong Pensions

SBI Life - Immediate Annuity

SBI Life - Shield

"SBI Life - Shield" used as

Keyman

SBI Life - Sudarshan

SBI Life - Scholar II

GROUP PRODUCTS SBI Life - CapAssure Gratuity

Scheme

SBI Life - CapAssure Superannuation

Scheme

SBI Life - CapAssure Leave

Encashment Scheme

SBI Life - Group Immediate Annuity

SBI Life - Golden Gratuity

SBI Life - Dhanrashi

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SBI Life - Group Gratuity cum

Life Cover Scheme

SBI Life - Group Superannuation Scheme

SBI Life - Group Leave Encashment cum Life Cover Scheme

SBI Life - Swarna Ganga

SBI Life - Sampoorn Suraksha

SBI Life - Super Suraksha

SBI Life - Super Suraksha

in Lieu of EDLI

SBI Life - Credit Guard

"SBI Life - Shield" used as Keyman

SBI Life - Swadhan (Group)

SBI Life - Dhanaraksha Plus SP

SBI Life - Dhanaraksha Plus LPPT

SBI Life - Dhanaraksha Plus RP

SBI Life - Nidhi Raksha RP

VACATION 2008

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Vacation 2008 is a mega fair organized by GANDHI CORPORATION, Ahmedabad

based event management company. We had a great opportunity to witness lacs of

people gathering at one place as SBI had booked a huge stall and marketed its wide

range range of products. It lasted for 11 days starting from 23rd May to 2nd June

2008.

Representatives from 15 different branches participated in this exhibition. Over here

we counsel inquires of home loan, car loan and education loan and handled queries

related to the same. Its was a unique experience for us in the sense that this kind of

gathering is not possible by SBI alone. Thus we learnt how to tackle mass customers

and satisfy them by fulfilling their needs.

We were fully supported by the representatives of other branches wherever we

required. We also handled the customers inquiring for mutual fund and insurance.

Thus we also got a chance to do the survey on mutual fund and insurance over here.

One important thing that we noticed at this fair was that there is still a huge potential

market of personal banking products in ahmedabad. But at the same time it is

equally important to market our products in this competitive era.

LOANS

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SBI home Loans

"THE MOST PREFERRED HOME LOAN PROVIDER" voted in AWAAZ Consumer Awards along with the MOST PREFERRED BANK AWARD in a survey conducted by TV 18 in association with AC Nielsen-ORG Marg in 21 cities across India.

SBI HOME LOANS now offer Interest Rates concessions on GREEN HOMES in accordance with SBI's commitment to Environment protection.

Unique features:

* Provision for on the spot "In principle" approval.

* Loan sanctioned within 6 days of submission of required documents.

* Option to avail Home Loan as a Term Loan or as an Overdraft facility to save on interest and maximize gains.

* Option to club income of spouse and children to compute eligible loan amount. * Provision to club depreciation, expected rent accruals from property proposed to compute eligible loan amount.

* Provision to finance cost of furnishing and consumer durables as part of project cost. * Repayment permitted up to 70 years of age

* Free personal accident insurance cover up to Rs.40 Lac.

* Optional Group Insurance from SBI Life at concessional premium (Upfront premium financed as part of project cost)

* Interest calculated on daily reducing balance basis, and starts from the date of disbursement.

* ‘Plus’ schemes which offer attractive packages with concessional interest rates to Govt. Employees, Teachers, Employees in Public Sector Oil Companies.

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* Special scheme to grant loans to finance Earnest Money Deposits to be paid to Urban Development Authority/ Housing Board, etc. in respect of allotment of sites/ house/ flat.

* Option to avail loan at the place of employment or at the place of construction

Loan Amount

40 to 60 times of NMI, depending on repayment capacity as % of NMI as under -

Net Annual Income EMI/NMI Ratio

Up to Rs.2 lacs 40%

Above Rs.2 lac to Rs. 5 lacs 50%

Above Rs. 5 lacs 55% Interest

Processing Fee

0.25% of Loan amount with a cap of Rs.5, 000/-(including Service Tax)

Pre-closure Penalty

No penalty if the loan is preclosed from own savings/windfall gains for which documentary evidence is produced by the customer.

In case, such proof is not produced by the borrower, penalty @ 2% on the amount prepaid in excess of normal EMI dues shall be levied if the loan is preclosed within 3 years from the date of commencement of repayment.

Security

• Equitable mortgage of the property

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• Other tangible security of adequate value like NSCs, Life Insurance policies etc., if the property cannot be mortgaged

Maximum Repayment Period

• For applicants up to 45 years of age: 20 years • For applicants over 45 years of age: 15 years

Moratorium Up to 18 months from the date of disbursement of first installment or 2 months after final disbursement in respect of loans for construction of new house/ flat (moratorium period will be included in the maximum repayment period)

Disbursement

• In lump sum direct in favour of the builder/ seller in respect of outright purchase

• In stages depending upon the actual progress of work in respect of construction of house/ flat etc.

CAR LOAN

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Low interest rates, easy repayment options, total transparency are the main features of SBI’s car loan.

Finance to include vehicle registration charges, insurance, one-time road tax and accessories (subject to conditions).

Customer can apply for an SBI Car Loan to purchase:

• A new car, jeep, Multi Utility Vehicle (MUV) or SUV (any make or model) • A used car / jeep / MUV /SUV (not more than 5 years old). (any make or

model)

Enjoy the SBI Advantage:

Excellent service and lower costs. SBI Car Loans for new and old vehicles offer you:

• Lowest interest rates • Longer repayment period of up to 84 months. • No hidden costs or administrative charges. • Finance for one-time road tax, registration fee, insurance premium and

accessories • No advance EMIs. (Some Banks/companies ask to pay one or more EMIs at the

time of disbursement of loan, thereby effectively reducing loan amount.) • Complete transparency: SBI levy interest on daily reducing balance method.

When customer pays one instalment, the interest is automatically calculated on the reduced balance thereafter. When customer pays interest on an annual reducing balance, as charged by many other companies/banks, the interest amount for the coming year is determined on the amount outstanding at the beginning of the year. Customers continue to pay interest even on the amounts you repay during the year.

.

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Type of Loan

1. Term Loan

2. Overdraft - a) For New vehicles only

b) Minimum loan amount: Rs. 3 lacs.

If customer is not an account holder with SBI he would also need to furnish documents that establish his identity and give proof of residence.

Margin

New / Used vehicles: 15% of the on the road price.

Repayment

Repayment period

For Salaried: Maximum of 84 months

For Self-employed & Professionals: Maximum 60 months

Repayment period for used vehicles: Up to 84 months from the date of original purchase of the vehicle (subject to maximum tenure as above).

Prepayment Penalty

Prepayment fee of 2% of the amount of the loan prepaid will be levied subject to certain conditions.

Processing Fee

0.50% of Loan amount and to be paid upfront.

Minimum: Rs. 500/-

Maximum Rs. 10,000

EDUCATION LOAN

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A term loan granted to Indian Nationals for pursuing higher education in India or abroad where admission has been secured.

Eligible Courses

All courses having employment prospects are eligible.

• Graduation courses/ Post graduation courses/ Professional courses • Other courses approved by UGC/Government/AICTE etc.

Expenses considered for loan

• Fees payable to college/school/hostel • Examination/Library/Laboratory fees • Purchase of Books/Equipment/Instruments/Uniforms • Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tuition fees

for the entire course) • Travel Expenses/Passage money for studies abroad • Purchase of computers considered necessary for completion of course • Cost of a Two-wheeler up to Rs. 50,000/-

Any other expenses required to complete the course like study tours, project work etc. Amount of Loan

• For studies in India, maximum Rs. 10 lacs • Studies abroad, maximum Rs. 20 lacs

Interest Rates (With effect from 1st June 2008) For loans up to Rs.4 lacs - 12.25 % p.a. floating For loans above Rs. 4 lacs and up to Rs.7.50 lacs - 13.50 % floating For loans above Rs.7.50 lacs - 12.75% p.a. floating

Processing Fees

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• No processing fee/ upfront charges • Deposit of Rs. 5000/- for education loan for studies abroad which will be

adjusted in the margin money

Repayment Tenure

Repayment will commence one year after completion of course or 6 months after securing a job, whichever is earlier.

Place of Study

Loan Amount

Repayment Period in Years

Studies in India

Rs. 10.0 lacs 5-7

Studies Abroad

Rs. 20.0 lacs 5-7

Security

Amount For loans up to Rs. 10.00 lacs for Studies in India and up to Rs. 20.00 lacs for studies abroad

Up to Rs. 4 lacs

No Security

4 lacs to Rs. 7.50 lacs

Collateral security in the form of suitable third party guarantee. The bank may, at its discretion, in exceptional cases, waive third party guarantee if satisfied with the net-worth/means of parent/s who would be executing the documents as "joint borrower".

Above Rs. 7.50 lacs.

Tangible collateral security of suitable value, along with the assignment of future income of the student for payment of installments.

All loans should be secured by parent(s)/guardian of the student borrower. In case of married person, co-obligator can be spouse or the parent(s)/ parents-in-law.

QUESTIONNAIRE

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Name :- Age :-

PART I- MUTUAL FUND

1) Where do u invest? ( ) Mutual Fund ( ) Insurance ( ) Fixed deposit ( ) others 2) Do you know what is Mutual Fund? ( ) yes ( ) no 3) How many mutual Fund companies are you aware of ?

( ) Reliance ( ) SBI ( ) UTI ( ) Kotak Mahindra ( ) ICICI ( ) Sundaram ( ) HSBC ( ) HDFC ( ) Others

4) Have you ever invested in Mutual Fund?

( ) yes ( ) no 5) Do you find it safe to invest in mf than in equity? ( ) yes ( ) no

6) What is the average return you expect from your investment in Mf? ( ) 0- 20% ( ) 20-40% ( ) 40-60% ( ) >60% 7) Are you aware about the Tax saver schemes in Mutual Fund? ( ) Yes ( ) No

PART II- INSURANCE 1) Have you insured yourself?

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( ) YES ( ) NO

2) What kind of Insurance plans are you aware of? ( ) Endowment plan ( ) Pension Plan ( ) Unit linked plans ( ) Pure Protection ( ) Protection cum saving ( ) Money back ( ) ( ) Others 3) Through which medium do you purchase insurance policies ?

( ) Banks ( ) agents

4) For what purpose you buy insurance policies?

( ) Investment ( ) safety ( ) tax savings ( ) all three

5) which insurance companies are you aware of? ( ) SBI LIFE ( ) LIC ( ) HDFC STD LIFE ( ) BHARTI AXA ( ) MAX NEWYORK ( ) KOTAK LIFE ( ) ICICI LIFE ( ) BAJAJ ALLIANZ ( ) OTHERS 6) Do you find it safe to invest in ULIPs?

( ) yes ( ) no

7) Are you aware about the SWADHAN policy of SBI? ( ) Yes ( ) no

ANALYSIS PART-I 1) WHERE DO YOU INVEST?

67

45

22

60

52 MUTUAL FUND

INSURANCE

FIXED DEPOSIT

OTHERS

The above results shows that still Fixed deposit holds top priority for people specially in low income group as far as investment choice is concerned. Others here include post office savings, realty etc. Mutual fund however in not as popular as it should be given SBI’s wide reach and performance.

2) DO YOU KNOW WHAT IS MUTUAL FUND?

58

42YES

NO

As shown in the above question mutual fund is not famous. The above result questions shows that only 58 people were aware of what mutual fund actually is. Thus this shows either the lack of marketing efforts by SBI or reluctance of people to move away from traditional source of investment i.e. fixed deposit.

68

3) HOW MANY MUTUAL FUND COMPANIES ARE YOU AWARE OF?

53

45

5842

35

37 1118

6

RELIANCE

SBI

UTI

KOTAK MAHINDRA

ICICI

SUNDRAM

HSBC

HDFC

OTHERS

The above graph shows that UTI is the most popular mutual fund company followed by Reliance. SBI too is popular but still 13 people who knew what mutual fund is were not aware that their own bank was offering Mutual Fund. This shows lack of marketing effort on part of SBI.

4) HAVE YOU EVER INVESTED IN MUTUAL FUND?

69

35

23YES

NO

The above findings show that of the 58 people who know about mutual fund only 35 had Invested in it. This shows that even though mutual fund is popular among people not many were prepared to invest in it. 5) DO YOU FIND IT SAFE TO INVEST IN MF THAN IN EQUITY?

53

5

YES

NO

From the above graph one can infer that 53 of 58 people who knew about mutual fund found it safer that investing directly in equity market. The reason given by them include safety from market volatility, tax benefit among others. While 5 still preferred investing in equity over mutual fund.

6) WHAT PERCENTAGE OF RETURN YOU EXPECT FROM YOUR

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INVESTMENT IN MUTUAL FUND?

8

15

9

3

0-20%

20-40%

40-60%

>60%

The above result shows that most people had moderate expectations from their investment in mutual fund. Only 12 were bullish on their trusted mutual fund scheme. In spite of so much growth in Indian capital market not many people expected that their capital would appreciate more than 50%. 7) ARE YOU AWARE ABOUT THE TAX SAVER SCHEME IN MUTUAL FUND?

48

10

YES

NO

71

The above findings show that 10 people of 58 were ignorant about the tax saver scheme offered by various mutual fund companies including their bank i.e. SBI, whose magnum tax gain has topped chart consistently. While 48 were well aware of tax saver scheme.

PART II

1) HAVE YOU INSURED YOURSELF?

72

28

yesno

Out of the 100 customers who have been taken into consideration 72 of them had insured themselves with 1 or more insurance companies or had 1 of more life insurance policies in their name. Rest 28 had not yet insured themselves with any of the life insurance companies, major reason being illiteracy, unawareness, or financial reasons to pay the premium. This class of people were not even able to write their names in their mother tongue.

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2) WHAT KIND OF INSURANCE PLANS ARE YOU AWARE OF?

48

42

243665

74

endowment

pension

unit linked

pure protection

protection cumsavingmoney back

In this particular survey we have considered all the plans that a particular customer is aware of. The result of same is as per our expectations.48 people were aware of what is endowment plan, 42 people were aware of what is pension plan offered by the life insurance companies.24 people were aware of what is unit linked insurance plans and 36 people were knowing what is pure protection plan. 65 people were having knowledge of what is protection cum saving plan and 74 people were aware about the money back plan of the life insurance companies. 3) THROUGH WHICH MEDIUM DO YOU PURCHASE INSURANCE POLICIES?

32

68

banksagents

73

Bancassurance is yet not that popular in India and so we ended up with 68 people who agreed that they purchase insurance through agents and 32 people purchased it through banks. One of the major reasons of buying the insurance policies through agents was the rolling back of commission by the agents to their customers. And the sales that came through banks were because of the smartness of the banks’ employee and their customer relationship skills. 4) FOR WHAT PURPOSE YOU BUY INSURANCE POLICIES?

40

87

42

35investmentsafetytax savingsall three

On being asked that why they have been buying policies from insurance companies the result were as follows.40 people told that they are opting insurance companies as a good investment option. 87 people told that they need the safety for their family and so they buy insurance.42 people took insurance for tax benefit and 35 people wanted all the three options and so they were buying it.

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5) WHICH ARE THESE LIFE INSURANCE COMPANIES ARE AWARE OF?

63

100

45153038

5422 8

sbi lifelichdfc std lifebharti axa max new york lifekotak lifeicici lifebajaj allianzothers

This question of our survey actually tested their general knowledge.63 people were aware of SBI life, all the 100 knew about LIC, 45 knew HDFC STANDARD life, 15 for BHARTI AXA life, 30 for MAX NEW YORK life, 38 for KOTAK life, 54 for ICICI PRUDENTIAL life, 22 for BAJAJ ALLIAZ life, and 8 fell in others category.

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6) DO YOU FIND IT SAFE TO INVEST IN ULIPS?

36

64

yesno

Out of the total 100 people 64 people said that they find it safe to invest in the ULIPs of life insurance companies. One reason why people found it prudent to invest in ULIPS was that they got benefit of both insurance and capital market. The rest 36 did not find it safe as they did not had even the basic knowledge of how exactly the ULIPs work. 7) ARE YOU AWARE ABOUT THE SWADHAN POLICY OF SBI LIFE?

18

82

yesno

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This particular policy SWADHAN of SBI life was specially designed for the SBI banks customers only. To our surprise 82 people were unaware of it and the major reason for this being the lack of marketing by SBI as a whole. Just 18 people knew about SWADHAN policy

FINDINGS

From the above findings we can summarize the following points

People are still accustomed to their earlier tradition of investing in to Fixed Deposits,

Post Office savings.

There still a huge market left untapped by mutual fund and insurance companies.

Not many people are aware about the bancassurance concept.

Unit linked insurance plans which are blend of insurance and mutual funds are yet to

find place among people of middle and lower class. This shows that people are not

risk averse.

SBI which is the leading bank of the country has not still placed itself parallel to LIC

in insurance business.

Swadhan policy which is designed for customers of SBI only is not very popular

among its customers, because of lack of marketing efforts by SBI.

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LIMITATIONS

The main limitation we faced was, we had only two branches to survey.

Time constraint was another limitation.

We had only two products two survey, one each of mutual fund and insurance.

Literacy wise the branches we surveyed were very low.

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BIBLIOGRAPHY

http://finance.indiamart.com/india_business_information/mutual_funds_terms.html (finance@indiamart) About.com www.google.com www.insuremagic.com/Content/Articles/Life/bancassurance.asp www.indianmba.com/Occasional_Papers/OP134/op134.html http://www.sbilife.co.in/sbilife/application www.123eng.com/forum/viewtopic.php?t=50507 www.allbankingsolutions.com/bancassurance.htm

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