mahendra portfolio management

8/12/2019 Mahendra Portfolio Management

1/46

1

Chapter 1

1.1 Introduction of ICICI Bank Ltd

ICICI Bank is India's largest private sector bank with total assets of Rs.5, ICICI Bank

was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its

wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a

public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed

on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-

stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional

investors in fiscal 2001 and fiscal 2002.

ICICI was formed in 1955 at the initiative of the World Bank, the Government of

India and representatives of Indian industry. The principal objective was to create a

development financial institution for providing medium-term and long-term project financing

to Indian businesses. In the 1990s, ICICI transformed its business from a development

financial institution offering only project finance to a diversified financial services group

offering a wide variety of products and services, both directly and through a number of

subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company

and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the

emerging competitive scenario in the Indian banking industry, and the move towardsuniversal banking, the managements of ICICI and ICICI Bank formed the view that the

merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities,

and would create the optimal legal structure for the ICICI group's universal banking strategy.

The merger would enhance value for ICICI shareholders through the merged entity's access

to low-cost deposits, greater opportunities for earning fee-based income and the ability to

participate in the payments system and provide transaction-banking services. The merger

would enhance value for ICICI Bank shareholders through a large capital base and scale of

operations, seamless access to ICICI's strong corporate relationships built up over five


2/46

2

decades, entry into new business segments, higher market share in various business segments,

particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries.

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the

merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal

Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger

was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court

of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and

the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's

financing and banking operations, both wholesale and retail, have been integrated in a single

entity.

ICICI Bank is India's second-largest bank with total assets of Rs.4,062.34 billion ($91

billion) at March 31, 2011 and profit after tax Rs. 51.51 billion ($1,155 million) for the year

ended March 31, 2011. The Bank has a network of 2,535 branches and 6,810 ATMs in India,

and has a presence in 19 countries, including India. ICICI Bank offers a wide range of

banking products and financial services to corporate and retail customers through a variety of

delivery channels and through its specialised subsidiaries in the areas of investment banking,

life and non-life insurance, venture capital and asset management.

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada,

branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai

International Finance Centre and representative offices in United Arab Emirates, China,

South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Their UK subsidiary has

established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the

National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are

listed on the New York Stock Exchange (NYSE).367.95 billion (US$ 99 billion) at March 31,

2013 and profit after tax Rs. 83.25 billion (US$ 1,533 million) for the year ended March 31,

2013. The Bank has a network of 3,382 branches and 10,943 ATMs in India, and has a

presence in 19 countries, including India.

ICICI Bank offers a wide range of banking products and financial services to

corporate and retail customers through a variety of delivery channels and through its

specialised subsidiaries in the areas of investment banking, life and non-life insurance,

venture capital and asset management.


3/46

3

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada,

branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai

International Finance Centre and representative offices in United Arab Emirates, China,

South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has

established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National

Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on

the New York Stock Exchange (NYSE).


4/46

4

1.2Products & Services provided by the ICICI Bank

Deposits and AccountsICICI Bank Privilege Banking has a range of accounts and deposits to cater to your

unique banking needs.

Our extensive branch & ATM network along with mobile, phone, internet and

doorstep banking, make your banking experience the best.

Types of Accounts offerings:

Titanium Privilege Savings Account Gold Privilege Savings Account Fixed Deposit Recurring Deposits Current Accounts Family Banking

Credit and Debit CardsEnjoy rewards and privileges along with unmatched convenience when you sign up

for any ICICI Bank Credit or Debit Card.

Types of Credit & Debit Cards offerings:

Titanium Debit Card Gold Debit Card
http://www.icicibank.com/privilege-banking/personal/titanium-savings-account.htmlhttp://www.icicibank.com/privilege-banking/personal/gold-savings-account.htmlhttp://www.icicibank.com/privilege-banking/personal/fixed-deposits.htmlhttp://www.icicibank.com/privilege-banking/personal/recurring-deposits.htmlhttp://www.icicibank.com/privilege-banking/personal/current-account.htmlhttp://www.icicibank.com/privilege-banking/personal/Family-banking.htmlhttp://www.icicibank.com/privilege-banking/personal/titanium-debit-card.htmlhttp://www.icicibank.com/privilege-banking/personal/gold-debit-card.htmlhttp://www.icicibank.com/privilege-banking/personal/gold-debit-card.htmlhttp://www.icicibank.com/privilege-banking/personal/titanium-debit-card.htmlhttp://www.icicibank.com/privilege-banking/personal/Family-banking.htmlhttp://www.icicibank.com/privilege-banking/personal/current-account.htmlhttp://www.icicibank.com/privilege-banking/personal/recurring-deposits.htmlhttp://www.icicibank.com/privilege-banking/personal/fixed-deposits.htmlhttp://www.icicibank.com/privilege-banking/personal/gold-savings-account.htmlhttp://www.icicibank.com/privilege-banking/personal/titanium-savings-account.html


5/46

5

Rubyx Credit Card

LoansAt ICICI Bank Privilege Banking, we offer you a wide range of loan products to help

you achieve your dreams. Quick, convenient and hassle-free access to car, home and personal

loans mean you can get financing when you need it.

Types of Loan offerings:

Home Loan Car Loan Personal Loan

InvestmentsTo secure the financial future for your family and you, an appropriate range of

investments is critical. At ICICI Bank Privilege Banking, we offer you various investment

options to help you build your wealth for self and for future generations.

Types of Investment Offerings:

ICICI Bank Pure Gold Foreign Exchange Services Public Provident Fund Account Mutual Funds

InsuranceAt ICICI Bank Privilege Banking, we help you to protect what is important to you.

Our range of third party insurance products covers everything from your health and life, to

your home and travels. Enjoy peace of mind and unmatched convenience with insurance

products facilitated by ICICI Bank.

Types of Insurance offerings:

Life Insurance Health Insurance Complete Health Insurance Policy Health Care Plus
http://www.icicibank.com/privilege-banking/personal/rubyx-card.htmlhttp://www.icicibank.com/privilege-banking/personal/home-loan.htmlhttp://www.icicibank.com/privilege-banking/personal/car-loan.htmlhttp://www.icicibank.com/privilege-banking/personal/personal-loan.htmlhttp://www.icicibank.com/privilege-banking/personal/Pure-Gold.htmlhttp://www.icicibank.com/privilege-banking/personal/Exchange-Services.htmlhttp://www.icicibank.com/privilege-banking/personal/Provident-Fund-Accounts.htmlhttp://www.icicibank.com/privilege-banking/personal/Mutual-Funds.htmlhttp://www.icicibank.com/Personal-Banking/insurance/life-insurance/protection-plans/icicipru-iCare.html?agentCode=01154717&productId=T29_S&UID=926http://www.icicibank.com/Personal-Banking/insurance/general-insurance/health-insurance/health-insurance.html?source=privilegebankinghttp://www.icicibank.com/Personal-Banking/insurance/general-insurance/health-insurance/health-insurance.html?source=privilegebankinghttp://www.icicibank.com/Personal-Banking/insurance/general-insurance/health-insurance/health-insurance.html?source=privilegebankinghttp://www.icicibank.com/Personal-Banking/insurance/general-insurance/health-insurance/health-insurance.html?source=privilegebankinghttp://www.icicibank.com/Personal-Banking/insurance/life-insurance/protection-plans/icicipru-iCare.html?agentCode=01154717&productId=T29_S&UID=926http://www.icicibank.com/privilege-banking/personal/Mutual-Funds.htmlhttp://www.icicibank.com/privilege-banking/personal/Provident-Fund-Accounts.htmlhttp://www.icicibank.com/privilege-banking/personal/Exchange-Services.htmlhttp://www.icicibank.com/privilege-banking/personal/Pure-Gold.htmlhttp://www.icicibank.com/privilege-banking/personal/personal-loan.htmlhttp://www.icicibank.com/privilege-banking/personal/car-loan.htmlhttp://www.icicibank.com/privilege-banking/personal/home-loan.htmlhttp://www.icicibank.com/privilege-banking/personal/rubyx-card.html


6/46


7/46

7

1.3 Portfolio Management in ICICI Bank

Portfolio Management Services (PMS) is a sophisticated investment vehicle that

offers a range of specialised investment strategies to capitalise on opportunities in the market.

ICICI Portfolio Management Services provides solutions for the investment needs of select

clientele, through focused portfolios.

ICICI AMC was the first institutional participant to offer Portfolio Management

Services to HNIs and Institutions in India, in the year 2000. We have a successful track

record of over 10 years of experience in offering Portfolio Management Services and today

our strong base of over 7,000 PMS clients stands testament to the quality and value of our

services.

Our aim -is to create a portfolio that suits your requirements; therefore we will first

seek to understand a clients needs and investment objectives, and on that basis offer a

portfolio that best suits these needs and objectives.

Personalized AdviceExperienced Fund Managers give you sound investment advice and strategies that

help you invest smartly. You get the best fund managers in the industry who craft customized

stock portfolios that work wonders. With PMS products distributed by ICICI Bank you get:


8/46

8

More choice in terms of portfolios to suit individual client needs and risk appetite Ability to structure products that meet specific investment objectives Choice of alternate investment products that were traditionally available to the very

wealthy

Professional ManagementPMS products distributed by ICICI Bank combine the benefits of professional money

management with the flexibility, control and potential tax advantages of owning individual

stocks or other securities. The Portfolio Managers take care of all the administrative aspects

of your portfolio with a monthly or semiannual reporting on the over-all status of the

portfolio and performance.

Continuous MonitoringThe expert Fund Managers and research team keep a constant watch on your money.

The teams of experts in these fund houses know exactly how your money is performing

through continuous monitoring. You, as a customer are always informed through:

Communications that include relevant information on major market events Quarterly or semi-annual performance updates


9/46

9

2.1 Evolution of Portfolio Management

Portfolio management is essentially a systematic method of maintaining ones

investment efficiently. Many factors have contributed to the existence and development ofthe concept. In the early years of the century analyst used financial statements to find the

value of the securities. The first to be analyzed using this was Railroad Securities of the USA.

A booklet entitled The Anatomy of the Railroad was published by Thomas F. Woodlock

in 1900. As the time progressed this method became very important in the investment field,

although most of the writers adopted different ways to publish there data. They generally

advocated the use of different ratios for this purpose. John Moody in his book The Art of

wall Street Investing, strongly supported the use of financial ratios to know the worth of the

investment. The proposed type of analysis later on became the common-size analysis. The

other major method adopted was the study of stock price movement with the help of price

charts. This method later on was known as Technical Analysis. It evolved during 1900-1902

when Charles H. Dow, the founder of the Dow Jones and Co. presented his view in the series

of editorials in the Wall Street Journal in USA. The advocates of technical analysis believed

that stock prices movement is ordered and systematic and the definite pattern could be

identified. There investment strategy was build around the identification of the trend and

pattern in the stock price movement.

Another prominent author who supported the technical analysis was Ralph N. Elliot

who published a book in the year 1938 titled The Wave Principle. After analyzing 75

years data of share price, he concluded that the market movement was quite orderly and

followed a pattern of waves. His theory is known as Elliot Wave Theory. According to J.C.

Francis the development of investment management can be traced chronologically through

three different phases. First phase is known as Speculative Phase. Investment was not a wide

spread activity, but a cake of few rich people. The process is speculative in nature.

Investment management was an art and needed skills. Price manipulation was resorted to by

the investors. During this time period pools and corners were used for manipulation. The

result of this was the stock exchange crash in the year 1929. Finally the daring speculative

ventures of investors were declared illegal in the US by the Securities Act of 1934. Second

phase began in the year 1930. The phase was of professionalism. After coming up of the

Securities Act, the investment industry began the process of upgrading its ethics, establishing

standard practices and generating a good public image. As a result the investments market


10/46

10

became safer place to invest and the people in different income group started investing.

Investors began to analyze the security before investing. During this period the research work

of Benjamin Graham and David L. Dood was widely publicized and publicly acclaimed.

They published a book Security Analysis in 1934, which was highly sought after. Their

research work was considered first work in the field of security analysis and acted as the base

for further study. They are considered as pioneers of security analysis as a discipline. Third

phase was known as the scientific phase. The foundation of modern portfolio theory was laid

by Markowitz. His pioneering work on portfolio management was described in his article in

the Journal of Finance in the year 1952 and subsequent books published later on.

He tried to quantify the risk. He showed how the risk can be minimized through

proper diversification of investment which required the creation of the portfolio. He provided

technical tools for the analysis and selection of optimal portfolio. For his work he won the

Noble Prize for Economics in the year 1990. The work of Markowitz was extended by the

William Sharpe, John Linter and Jan Mossin through the development of the Capital

Asset Pricing Model (CAPM). If we talk of the present the last two phases of

Professionalism and Scientific Analysis are currently advancing simultaneously with

investment in various financial instruments becoming safer, with proper knowledge to each

and every investor.


11/46

11

2.2 Portfolio management in developed countries :-

Deutsche BankDeutsche Bank brings Portfolio Management Services (PMS) from seven providers

that work towards the growth of funds. The recommendations aim to ensure that the strategy

and portfolio are built on solid foundations. Depending on the risk appetite and desired

returns, one can select from a range of superior PMS products in the country, including the

products from Prudential ICICI, Reliance Capital, Franklin Templeton, and Benchmark Asset

Management

ICICI Bank Wealth ManagementICICI Bank Wealth Management assist for the Portfolio Management Services (PMS)

by referring to the partner Asset Management Companies. Their partner Asset Management

Companies conduct detailed and scientific analysis of various investment avenues to help you

invest your money.

PMS can be of the following categories

Equity-based Products Commodity-based Products Index-linked Products

Federal BankFederal Bank launches portfolio investment scheme for NRIs

KOCHI: Kerala-based Federal Bank on Friday launched its Portfolio Investment

(PIS) Scheme for NRIs in tie up with Geojit BNP Paribas Financial Services Ltd,

offering "hassle free" facilities for investments in stock market. The bank, which has

been authorized by RBI to administer the scheme, was the first among the traditional

private sector banks to offer the facility.
http://economictimes.indiatimes.com/federal-bank-ltd/stocks/companyid-9211.cmshttp://economictimes.indiatimes.com/geojit-bnp-paribas-financial-services-ltd/stocks/companyid-6853.cmshttp://economictimes.indiatimes.com/geojit-bnp-paribas-financial-services-ltd/stocks/companyid-6853.cmshttp://economictimes.indiatimes.com/federal-bank-ltd/stocks/companyid-9211.cms


12/46

12

2.3 History of portfolio management in Indian banks

Unit Trust of IndiaIt is a financial organization in India, which was created by the UTI Act passed by the

Parliament in 1963. It has over 70 schemes in domestic MF space and has the largest investor

base of over 9 million in the whole industry. It is present in over 450 districts of the country

and has 100 branches called UTI Financial Centers or UFCs. About 50% of the total IFAs in

the industry work for UTI in distributing its products! India Posts, PSU Banks and all the

large Private and Foreign Banks have started distributing UTI products. The total average

Assets Under Management (AUM) for the month of June 2008 was Rs. 530 billion and it

ranked fourth. In terms of equity AUM it ranked second and in terms of Equity and Balanced

Schemes AUM put together it ranked FIRST in the industry. This measure indicates its

revenue- earning capacity and its financial strength.

Besides running domestic MF Schemes UTI AMC is also a registered portfolio

manager under the SEBI (Portfolio Managers) Regulations. It runs different portfolios for its

HNI and Institutional clients. It is also running a Sharia Compliant portfolio for its Offshore

clients. UTI tied up with Shinsei Bank of Japan to run a large size India-centric portfolio for

Japanese investors.

For its international operations UTI has set up its 100% subsidiary, UTI International

Limited, registered in Guernsey, Channel Islands. It has branches in London, Dubai and

Bahrain. It has set up a Joint Venture with Shinsei Bank in Singapore. The JV has got its

license and has started its operations.

In the area of alternate assets, UTI has a 100% subsidiary called UTI Ventures at

Banglore This company runs two successful funds with large international investors being

active participants. UTI has also launched a Private Equity Infrastructure Fund along with

HSH Nord Bank of Germany and Shinsei Bank of Japan.


13/46

13

Bank Of Baroda 1969

The Bank was brought into existence by a Ordinance issue on 19 th July, by the

Central Government. The Bank is a Government of India. Undertaking and carries on all

types of banking business including foreign exchange. The Ordinance was replaced by the

Banking Companies (Acquisition and Transfer of Undertaking) Act, 1969. Besides managing

public issues and giving underwriting support,

The Bank established a `Non-resident Portfolio Management. Consultancy Cell'. Due to

closure of 2 branches in U.K. and 1 branch

in UAE, non-operative branch in Bangladesh was not taken into account.

1970Income-Tax consultancy services was set-up in September to assist. Its constituents

in the filing of income returns. Bank of Baroda (U.K.) Nominees Ltd., London is a subsidiary

of the Bank. Bob Fiscal Services Ltd., is also a subsidiary of the Bank which handles

functions such as merchant banking, equipment leasing, investment banking, inter-corporate

deposit, etc. Bank of Baroda (Kenya) Ltd., Kenya is subsidiary of the Bank.


14/46

14

CHAPTER 3

Introduction of Portfolio Management

An investor considering investment in securities is faced with the problem of

choosing from among a large number of securities and how to allocate his funds over this

group of securities. Again he is faced with problem of deciding which securities to hold and

how much to invest in each. The risk and return characteristics of portfolios. The investor

tries to choose the optimal portfolio taking into consideration the risk return characteristics of

all possible portfolios. As the risk return characteristics of individual securities as well as

portfolios also change. This calls for periodic review and revision of investment portfolios of

investors. An investor invests his funds in a portfolio expecting to get good returns consistent

with the risk that he has to bear. The return realized from the portfolio has to be measured

and the performance of the portfolio has to be evaluated. It is evident that rational investment

activity involves creation of an investment portfolio. Portfolio management comprises all the

processes involved in the creation and maintenance of an investment portfolio. It deals

specifically with the security analysis, portfolio analysis, portfolio selection, portfolio

revision & portfolio evaluation. Portfolio management makes use of analytical techniques of

analysis and conceptual theories regarding rational allocation of funds. Portfolio management

is a complex process which tries to make investment activity more rewarding and less risky.


15/46

15

Investing in securities such as shares, debentures, and bonds is profitable as well as

exciting. It is indeed rewarding, but involves a great deal of risk and calls for scientific

knowledge as well artistic skill. In such investments both rationale and emotional responses

are involved. Investing in financial securities is now considered to be one of the best avenues

for investing one savings while it is acknowledged to be one of the best avenues for investing

one saving while it is acknowledged to be one of the most risky avenues of investment. It is

rare to find investors investing their entire savings in a single security. Instead, they

tend to invest in a group of securities. Such a group of securities is called portfolio .

Creation of a portfolio helps to reduce risk, without sacrificing returns. Portfolio management

deals with the analysis of individual securities as well as with the theory and practice of

optimally combining securities into portfolios. An investor who understands the fundamental

principles and analytical aspects of portfolio management has a better chance of success.


16/46

16

3.1 Definition of 'Portfolio Management'

The art and science of making decisions about investment mix and policy, matching

investments to objectives, asset allocation for individuals and institutions, and balancing risk

against performance.

Portfolio management is all about strengths, weaknesses, opportunities and threats in

the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other

tradeoffs encountered in the attempt to maximize return at a given appetite for risk.


17/46

17

3.2 Objectives Portfolio management

Portfolio means combined holding of many kinds of financial securities. Such as shares,

debenture, government bonds, units and other financial assets. Making a portfolio means

putting ones eggs in different baskets with varying elements of risk and returns. The object

of portfolio is to reduce risk by diversification and maximize gain. Portfolio management is

also known as investment management

Objectives of Portfolio Management

There are seven objectives of portfolio management:

1)Return:

Portfolio management is technique ofinvesting in securities. The ultimate object of

investment in the securities is return. Hence, the firstobjective of portfolio management is

getting higher return.

2) Capital Growth:

Some investors do not need regular returns. Their object of portfolio management is that not

only their current wealth is invested in the securities; they also want a channel where their

future incomes will also be invested.

3) Liquidity:

Some investors prefer that the portfolio should be such that whenever they need their

money, they may get the same.

4) Availability of Money at Pre-decided Time:

Some persons invest their money to use it at pre-decided time, say education of children,

etc. Their objective of portfolio planning would be that they get their money at that time.

5) Favorable Tax Treatment:

Sometimes, some portfolio planning is done to obtain some tax savings.
http://en.wikipedia.org/wiki/Rate_of_returnhttp://en.wikipedia.org/wiki/Rate_of_returnhttp://www.wikinvest.com/metric/Investmentshttp://en.wikipedia.org/wiki/Goalhttp://en.wikipedia.org/wiki/Goalhttp://www.wikinvest.com/metric/Investmentshttp://en.wikipedia.org/wiki/Rate_of_return


18/46

18

6) Maintaining the Purchasing Power:

Inflation eats the value of money, i.e., purchasing power. Hence, one object of the

portfolio is that it must ensure maintaining the purchasing power of the investor intact

besides providing the return.

7) Risk Reduction through Diversification:

It is the perhaps most important object of the portfolio management. All other objectives

(mentioned above) can be achieved even withoutportfolio, i.e., through investment in a single

security, but reduction (without sacrificing the return) is possible only through portfolio.

If we invest in a single security, our return will depend solely on that security; if that security

flops, our entire return will be severely affected. Clearly, held by itself, the single security is

highly risky. If we add nine other unrelated securities to that single security portfolio, the

possible outcome changes if that security flops, our entire return wont be as badly hurt. By

diversifying our investments, we can substantially reduce the risk of the single security.

Diversification substantially reduces the risk with little impact on potential returns. The key

involves investing in categories or securities that are dissimilar.

The two basic principles of effectiveportfolio management :

(i) Invest on the basis of fundamentals of thesecurity.(ii) Review and update the portfolio regularly.

The object of the portfolio management is to provide maximum return on the investments by

taking only optimum risk. To achieve these objectives, theportfolio manager should invest in

diversifiedsecurities and see that thecoefficient ofcorrelationbetween these securities is as

less as possible (only then the portfolio will be able to reduce the risk). This is the foundation

of portfolio management. The portfolio manager should follow the above-mentioned

principles to further strengthen his targets of higher returns and optimum risk.

The first principle suggests that investment should be made only in those securities which are

fundamentally strong. The strength of a security depends upon three strengths:
http://en.wikipedia.org/wiki/Investment_managementhttp://www.wikinvest.com/metric/Investmentshttp://en.wikipedia.org/wiki/Securityhttp://en.wikipedia.org/wiki/Portfolio_managerhttp://en.wikipedia.org/wiki/Security_%28finance%29http://en.wikipedia.org/wiki/Correlation_and_dependencehttp://en.wikipedia.org/wiki/Correlation_and_dependencehttp://en.wikipedia.org/wiki/Correlation_and_dependencehttp://en.wikipedia.org/wiki/Security_%28finance%29http://en.wikipedia.org/wiki/Portfolio_managerhttp://en.wikipedia.org/wiki/Securityhttp://www.wikinvest.com/metric/Investmentshttp://en.wikipedia.org/wiki/Investment_management


19/46

19

(a) Strength of the company,

(b) Strength of the industry, and

(c) Strength of the economy.

The strength of the company depends upon various factors like

I. Intelligent, dedicated and motivated human resources,

II. Having positive values and vision,

III. Policy regarding encouraging R&D

IV. Integrity of promoters, and

V. Long range planning for profits.

The fundamentals of the industry depend upon the product consumer surplus the product

provides to its users, various possible alternative uses of the product, and availability (rather

we should say non-availability of the substitutes). Economy, here, means national economyBy

fundamentals of the economy we mean recession/boom, tax policy, monetary policy,

budgetary policies, stability of government, possibility of war and its impact on economy,

closed/open economy and finally the governments attitude towards business houses. The

portfolio manager should see that most of the fundamentals are favorably placed.

The second principle suggests that the portfolio should be reviewed continuously and if need

be, revised immediately.

TheFundamentals of the company, industry and economy keep on changing. Accordingly,

the portfolio should be revised according to emerging situations. For example, in case of

monsoon failure, investments should move from fertilizer companies to irrigation companies,

in case some sick-minded person takes over as CEO of the company, perhaps desired step

will be to disinvest the securities of the company, in case cheaper substitutes have emerged

for any industrys product, better move to some other industry, etc.

Two more points regarding the second principle

(i) Sometimes, after making the investment in some securities, portfolio manager realizes

that his decision of investing in that security is wrong, he should not wait for happening of
http://en.wikipedia.org/wiki/The_Fundamentalshttp://en.wikipedia.org/wiki/The_Fundamentals


20/46


21/46

21

3.4 TYPES OF PORTFOLIO MANAGEMENT :-

The two types of portfolio management services are available for the investors:

1. The Discretionary portfolio management services (DPMS):In this type of services, the client parts with his money in favor of

man ager , w ho in re t urn , h and les a l l the pap er work, makes al l the

decisions and gives a good return on the investment and for this he charges a certain

fees.

In this discretionary PMS, to maximize the yield, almost all portfolio managers

parks the funds in the mon ey market s e cu r i t i e s s u c h a s o v ern i gh t ma r k e t ,

1 8 2 d a ys t r ea s u r y bills and 90 days commercial bills.

No rmal ly, return on such in vestmen t varies fro m 14 to 18per cent,

depending on the call money rates prevailing at the time of investment.

2. The Non-discretionary portfolio management services:

The manager function as a counselor, but the investor is free to accept or reject the

managers advice, the manager for a services charge also undertakes th e paper work.

The manager concentrates on stock market instruments with a portfolio tailor

made to the risk tak ing ab ilit y of the investor.


22/46

22

3.5 Steps in portfolio management in ICICI Bank:-

1) IDENTIFICATION OF THE OBJECTIVES

The starting point in the process is to determine the characteristics of an various investment

and then matching them with the individuals need and preferences. All the personal investing

is designed in order to achieve certain objectives.

These objectives may be tangible such as buying a car, house etc. and intangible objectives

such as social status, security etc. Similarly, these objectives may be classified as financial or

personal objectives. Financial objectives are safety, profitability and liquidity. Personal or an

individual objectives may be related to personal characteristics of individuals such as family

commitments, status, depends, educational requirements, income, consumption and provision

for retirement etc.

2) FORMULATION OF PORTFOLIO STRATEGY

The aspect of Portfolio Management is the most important element of proper portfolio

investment and speculation. While planning , a careful review should be conducted about the

financial situation and current capital market conditions.

This will suggest a set of investment and speculation policies to be followed.


23/46

23

The statement of investment policies includes the portfolio objectives, strategies and

constraints. Portfolio strategy means plan or policy to be followed while investing in different

types of assets.

There are different investment strategies. They require changes as time passes, investors

wealth changes, security price change, investors knowledge expands.

Therefore, the optional strategic asset allocation also changes. The strategic asset allocation

policy would call for broad diversification through an indexed holding of virtually all

securities in the asset class.

3) SELECTION OF ASSET MIX

The most important decision in portfolio management is selection of asset mix. It means

spreading out portfolio investment into different asset classes like bonds, stocks, mutual

funds etc. In other words selection of asset mix means investing indifferent kinds of assets

and reduces risk and volatility and maximizes returns in investment portfolio.

Selection of asset mix refers to the percentage to the invested in various security classes. The

security classes are simply the type of securities asunder:

1. Money market instrument

2. Fixed income security

3. Equity shares

4. Real estate investment

5. International securities

Once the objective of the portfolio is determined the securities to be included in the portfolio

must be selected. Normally the portfolio is selected from a list of high-quality bonds that the

portfolio manager has at hand. The portfolio manager has to decide the goals before selecting

the common stock.

The goal may be to achieve pure growth, growth with some income or income only. Once the

goal has been selected, the portfolio man ager can select the common stocks.


24/46

24

4) PORTFOLIO EXECUTION:

The process of portfolio management involves a logical set of steps common to any decision,

plan implementation and monitor. Applying this process to actual portfolios can be complex

Therefore, in the execution stage, three decisions need to be made, if the percentage holdings

of various asset classes are currently different from desired holdings. The portfolio than,

should be rebalanced. If the statement of investment policy requires pure investment strategy,

this is only thing, which is done in the execution stage.

However, many portfolio managers engage in the speculative transactions in the belief that

such transactions will generate excess risk-adjusted returns.

Such speculative transactions are usually classified as timing or selection decisions. Timing

decisions over or under weight various asset classes, industries or economic sectors from the

strategic asset allocation.

Such timing decisions are known as tactical asset allocation and selection decision deals with

securities within a given asset class, industry group or economic sector. The investor has to

begin with periodically adjusting the asset mix to the desired mix, which is known as

strategic asset allocation. Then the investor or portfolio manager can make any tactical asset

allocation or security selection decision.

5) PORTFOLIO REVISION

Portfolio management would be an incomplete exercise without periodic review. The

portfolio, which is once selected, has to be continuously reviewed over a period of time and

if necessary revised depending on the objectives of investor. Thus, portfolio revision means

changing the asset allocation of a portfolio.

Investment portfolio management involves maintaining proper combination of securities,

which comprise the investors portfolio in a manner that they give maximum return with

minimum risk. For this purpose, investor should have continuous review and scrutiny of his

investment portfolio. Whenever adverse conditions develop, he can dispose of the securities,

which are not worth.


25/46


26/46

26

3.6 FUNCTIONS OF PORTFOLIO MANAGEMENT

The basic purpose of portfolio management is to maximize yield and minimize risk. Every

investor is risk averse. In order to diversify the risk by investing into various securities

following functions are required to be performed.

The functions undertaken by the portfolio management are as follows:

1. To frame the investment strategy and select an investment mix to achieve the desired

investment objective;

2. To provide a balanced portfolio which can not only hedge against the inflation but can

also optimize returns with the associated degree of risk;

3. To make timely buying and selling of securities;

4. To maximize the after-tax return by investing in various taxes saving investment

instruments.


27/46


28/46

28

3.8 Advantages of Portfolio Management :-

Capital markets over a long period have always given a better return than anyother investment.

The investment in stock markets by individuals is a complicated business. It isbetter that a professional handles this.

3.9 Disadvantage of Portfolio Management :-

The most obvious disadvantage is of active management is that the fund managermay make bad investment choices or follow an unsound theory in managing the

portfolio.

The fees associated with active management are also higher than those associatedwith passive management, even if frequent trading is not present.

Those who are considering investing in an actively-managed mutual fund shouldevaluate the fund'sprospectus carefully.

Data from recent decades demonstrates that the majority of actively-managed largeand mid-cap stock funds in United States fail to outperform their passive stock index

counterparts.
http://en.wikipedia.org/wiki/Prospectus_%28finance%29http://en.wikipedia.org/wiki/Prospectus_%28finance%29


29/46

29

CHAPTER 4

Portfolio Management Services in ICICI Bank

Portfolio Management Services account is aninvestmentportfolio in Stocks, Debt and

fixed income products managed by a professional money manager,that can potentially be

tailored to meet specific investment objectives. When you invest in PMS, you own individual

securities unlike a mutual fund investor, who owns units of the entire fund. You have the

freedom and flexibility to tailor your portfolio to address personal preferences and financial

goals. Although portfolio managers may oversee hundreds of portfolios, your account may be

unique. As per SEBI guidelines, only those entities who are registered with SEBI for

providing PMS services can offer PMS to clients. There is no separate certification required

for selling any PMS product. So this is case where miss-selling can happen. As per the SEBI

guidelines, the minimum investment required to open a PMS account is Rs. 5 Lacs. However,

different providers have different minimum balance requirements for different products. For

E.g Birla AMC PMS is having min amount requirement of Rs. 25 lacs for a product.

Similarly HSBC AMC is having minimum requirement of 50 lacs for their PMS and Reliance

is having min requirement of Rs. 1 Crore. In India Portfolio Management Services are also

provided byequitybroking firms & wealth management services.
http://www.tflguide.com/2011/03/portfolio-management-services-in-india-pms.htmlhttp://www.tflguide.com/2011/02/systematic-investment-plan-mutual-fund-sip-best.htmlhttp://www.tflguide.com/2011/02/systematic-investment-plan-mutual-fund-sip-best.htmlhttp://www.tflguide.com/2011/02/systematic-investment-plan-mutual-fund-sip-best.htmlhttp://www.tflguide.com/2012/01/best-mutual-funds-to-invest-in-2012-in-india.htmlhttp://www.tflguide.com/2012/01/best-mutual-funds-to-invest-in-2012-in-india.htmlhttp://www.tflguide.com/2010/11/what-is-equity-understand-its-right-meaning-to-reap-the-benifit.htmlhttp://www.tflguide.com/2010/11/what-is-equity-understand-its-right-meaning-to-reap-the-benifit.htmlhttp://www.tflguide.com/2010/11/what-is-equity-understand-its-right-meaning-to-reap-the-benifit.htmlhttp://www.tflguide.com/2010/11/what-is-equity-understand-its-right-meaning-to-reap-the-benifit.htmlhttp://www.tflguide.com/2012/01/best-mutual-funds-to-invest-in-2012-in-india.htmlhttp://www.tflguide.com/2011/02/systematic-investment-plan-mutual-fund-sip-best.htmlhttp://www.tflguide.com/2011/03/portfolio-management-services-in-india-pms.html


30/46

30

How can investor invest in a Portfolio Management Services

(PMS) in ICICI Bank?

There are two ways in which an investor can invest in a Portfolio Management Services:

1. Through Cheque payment.

2. Through transferring existing shares held by the customer to the PMS account. The Value

of the portfolio transferred should be above the minimum investment criteria.

Beside this customer will need sign a few documents likePMS agreement with the provider,

Power of Attorney agreement, New demat account opening format (even if investor has a

demat account he is required to open a new one) and documents like PAN, address proof and

Identity proofs are mandatory. NRIs can invest in a PMS. The NRI needs to open a PIS

account for investing in PMS. The documentation required for an NRI, however, is

different from a resident Indian. A checklist of documents is provided by each PMS

provider.


31/46

31

4.1 How is PMS different from a Mutual Fund in ICICI Bank?

Both PMS and Mutual Funds are types of managed Funds. The difference to the investor in a

Portfolio Management Services over a Mutual Fund is:

Concentrated Portfolio. Portfolio can be tailored to suit the needs of investor. Investors directly own the stocks, rather than the fund owning the stocks. Difference in taxation


32/46


33/46

33

4.3 Portfolio Management Services (PMS) Charges in ICICI

Bank:-

A PMS charges following fees. The charges are decided at the time of investment

and are vetted by the investor.

Entry Load PMS schemes may have an entry load of 3%. It is charged at the time of

buying the PMS only.

Management Charges Every Portfolio Management Services scheme charges Fund

Management charges. Fund Management Charges may vary from 1% to 3% depending upon

the PMS provider. It is charged on a quarterly basis to the PMS account.

Profit Sharing Some PMS schemes also have profit sharing arrangements (in addition to

the fixed fees), wherein the provider charges a certain amount of fees/profit over the

stipulated return generated in the fund. For Eg PMS X has fixed charges of 2% plus a charge

of 20% of fees for return generated above 15% in the year. In this case if the return generated

in the year by the scheme is 25%, the fees charged by the PMS will be 2% + {(25%-

15%)*20%}.

The Fees charged is different for every Portfolio Management Services provider and for

every scheme. It is advisable for the investor to check the charges of the scheme.

Apart from the charges mentioned above, the PMS also charges the investors on following

counts as all the investments are done in the name of the investor:

Custodian Fee De mat Account opening charges

Audit charges Transaction brokerage


34/46

34

4.4 Taxation for Portfolio Management Services in ICICI Bank:-

Any income from Portfolio Management Services account is a business income.

Unlike MF, PMS is not required to remain 65%+ invested in equity to get equity taxation

benefit. Each Portfolio Management Services account is in the name of additional investor

and so the tax treatment is done on an individual investor level. Profit on the same can be

considered as business income.( i.e slab wise). Profit can be considered as Capital gains.

[STCG (15%) or LTCG(Tax free)]. It depends on clients Chartered Accountant or the

assessing officer how he treats this Income. The PMS provider sends an audited statement at

the end of the FY giving details of STCG and LTCG, it is on the client and his CA to decide

to treat it as capital gain or business income.


35/46

35

4.5 PORTFOLIO MANAGEMENT SCHEMES (PMS)

PRESENT SCENARIO in ICICI Bank:-

The regulatory environment has totally changed now and with SEBI fixing strict

norms for companies launching PMS, only the serious players are going to enter his

business. The PMS members today have full transparency: managers are required to

maintain individual accounts showing all dealings in a clients portfolio.

They must also advise him on all transactions. Secondly, all PMS Managers have to

send their clients at least a quarterly report giving the status of their portfolio and the

transactions that have taken place. The client-PMS manager contract is as per SEBI ground

rules.

It has several checks to protect investors interest like laying the custodial

responsibility on the manager and preventing any alterations in the scheme without the

clients consent. Finally, managers have to send half-yearly reports to SEBI on their portfolio

management activities. Experienced handling of cash and money power apart, PMS also

takes care of a number of the headaches endemic with investing in the markets. The biggest

one is custodial services.

All PMS Managers act as custodians of shares and are responsible for the load of

paper work related to the share transfer, documentation work, postal work and even ensuring

that dividends are credited to clients account. SEBI directives also put the onus on the PMS

promoters to take follow-up action in case shares are lost or damaged.

Difficulties such as late transfer and postal theft are reduced incase of brokers,

because they not only have direct access to registrars but also have branch offices to ensure

quicker transfers. All these services come for a fee, of course. While the actual PMS charges

vary from a high of 7% of the amount invested to a low of around 3.5%, follow-up servicescharges extra. As in all schemes, there is a downside to putting cash into portfolio

management as well.

The most important is the fact that despite all the SEBI checks. PMS Managers are

not allowed to assured any fixed returns. This really discharges the managers for any

responsibility if the scheme does badly. So investors have to be very careful in choosing the

promoters. Problem inherent in most schemes on offer will be misused of investors funds to

some extent. Funds collected from investors will aid the brokers concerned in their own

games in the market.


36/46

36

CHAPTER 5

Portfolio Manager of ICICI Bank:-

A portfolio managerof icici bank is either a person who makesinvestment decisions

using money other people have placed under his or her control or a person who manages a

financial institution's asset and liability (loan and deposit) portfolios. On the investments side,

they work with a team of analysts and researchers, and are ultimately responsible for

establishing an investment strategy, selecting appropriate investments and allocating each

investment properly for a fund- or asset-management vehicle.

Portfolio managers are presented with investment ideas from internal buy-side

analysts and sell-side analysts from investment banks. It is their job to sift through the

relevant information and use their judgment to buy and sell securities.Throughout each day,

they read reports, talk to company managers and monitor industry and economic trends

looking for the right company and time to invest theportfolio'scapital.

A team of analysts and researchers are ultimately responsible for establishing an

investment strategy, selecting appropriate investments and allocating each investment

properly for a fund or asset-management vehicle.

Portfolio managers make decisions about investment mix and policy, matching investments

to objectives, asset allocation for individuals and institutions, and balancing risk against

performance.

Portfolio management is about strengths, weaknesses, opportunities and threats in the

choice of debt vs. equity, domestic vs. international, growth vs. safety, and other tradeoffs

encountered in the attempt to maximize return at a given appetite for risk.

In the case of mutual and exchange-traded funds (ETFs), there are two forms of

portfolio management: passive and active.Passive management simply tracks a market index,

commonly referred to as indexing or index investing. Active management involves a single

manager, co-managers, or a team of managers who attempt to beat the market return by

actively managing a fund's portfolio through investment decisions based on research and

decisions on individual holdings.Closed-end funds are generally actively managed.
http://en.m.wikipedia.org/wiki/Investmenthttp://en.m.wikipedia.org/wiki/Strategyhttp://en.m.wikipedia.org/wiki/Business_analysthttp://en.m.wikipedia.org/wiki/Investment_bankhttp://en.m.wikipedia.org/wiki/Security_%28finance%29http://en.m.wikipedia.org/wiki/Industryhttp://en.m.wikipedia.org/wiki/Economicshttp://en.m.wikipedia.org/wiki/Portfolio_%28finance%29http://en.m.wikipedia.org/wiki/Financial_capitalhttp://en.m.wikipedia.org/wiki/Strategyhttp://en.m.wikipedia.org/wiki/Passive_managementhttp://en.m.wikipedia.org/wiki/Closed-end_fundshttp://en.m.wikipedia.org/wiki/Closed-end_fundshttp://en.m.wikipedia.org/wiki/Passive_managementhttp://en.m.wikipedia.org/wiki/Strategyhttp://en.m.wikipedia.org/wiki/Financial_capitalhttp://en.m.wikipedia.org/wiki/Portfolio_%28finance%29http://en.m.wikipedia.org/wiki/Economicshttp://en.m.wikipedia.org/wiki/Industryhttp://en.m.wikipedia.org/wiki/Security_%28finance%29http://en.m.wikipedia.org/wiki/Investment_bankhttp://en.m.wikipedia.org/wiki/Business_analysthttp://en.m.wikipedia.org/wiki/Strategyhttp://en.m.wikipedia.org/wiki/Investment


37/46

37

5.1 QUALITIES OF PORTFOLIO MANAGER of ICICI Bank:-

1. Sound general knowledge:

Portfolio management in icici bank is an existing and challenging job. He has to work in an extremely uncertain and conflicting environment. In the stock market every new piece of information affects the value of the securities

of different industries in a different way.

He must be able to judge and predict the effects of the information he gets. He must have sharp memory, alertness, fast intuition and self-confidence to arrive at

quick decisions.

2. Analytical Ability:

He must have his own theory to arrive at the value of the security. An analysis of the securitys values, company, etc. is continues job of the portfolio

manager in icici bank.

A good analyst makes a good financial consultant. The analyst can know the strengths, weakness, opportunities of the economy, industry

and the company.

3. Marketing skills:

He must be good salesman. He has to convince the clients about the particular security. He has to compete with the Stock brokers in the stock market.

In this Marketing skills help him a lot.

4. Experience:

In the cyclical behavior of the stock market history is often repeated, therefore theexperience of the different phases helps to make rational decisions.

The experience of different types of securities, clients, markets trends etc. makes aperfect professional manager.


38/46

38

5.2 FUNCTIONS OF PORTFOLIO MANAGERS:

Advisory role: Advice new investments, review the existing ones, identification ofobjectives, recommending high yield securities etc.

Conducting market and economic service:This is essential for recommending goodyielding securities they have to study the current fiscal policy, budget proposal;

individual policies etc. further portfolio manager should take in to account the credit

policy, industrial growth, foreign exchange possible change in corporate laws etc.

Financial analysis:He should evaluate the financial statement of company in order tounderstand, their net worth future earnings, prospectus and strength.

Study of stock market :He should observe the trends at various stock exchange andanalysis scripts so that he is able to identify the right securities for investment

Study of industry: He should study the industry to know its future prospects,technical changes etc., required for investment proposal he should also see the

problems of the industry.

Decide the type of port folio:Keeping in mind the objectives of portfolio a portfoliomanager has to decide whether the portfolio should comprise equity preference shares,

debentures, convertibles, non-convertibles or partly convertibles, money market,

securities etc. or a mix of more than one type of proper mix ensures higher safety, yield

and liquidity coupled with balanced risk techniques of portfolio management.


39/46

39

5.3 CODE OF CONDUCT- PORTFOLIO MANAGERS of ICICI

Bank:

1. A portfolio manager shall, in the conduct of his business, observe high standards of

integrity and fairness in all his dealings with his clients and other portfolio managers.

2. The money received by a portfolio manager from a client for an investment purpose should

be deployed by the portfolio manager as soon as possible for that purpose and money due and

payable to client should be paid forthwith.

3. A portfolio manager shall render at all time high standards of services exercise due

diligence, ensure proper care and exercise independent professional judgment. The portfolio

manager shall either avoid any conflict of interest in his investment or disinvestments

decision, or where any conflict of interest arises; ensure fair treatment to all his customers.

He shall disclose to the clients, possible sources of conflict of duties and interest, while

providing unbiased services. A portfolio manager shall not place his interest above those of

his clients.

4. A portfolio manager shall not make any statement or become privy to any act, practice or

unfair competition, which is likely to be harmful to the interests of other portfolio managers

or it likely to place such other portfolio managers in a disadvantageous position in relation to

the portfolio manager himself, while competing for or executing any assignment.

5. A portfolio manager shall not make any exaggerated statement, whether oral or written, to

the client either about the qualification or the capability to render certain services or hisachievements in regard to services rendered to other clients.

6. At the time of entering into a contract, the portfolio manager shall obtain in writing from

the client, his interest in various corporate bodies, which enables him to obtain unpublished

price-sensitive information of the body corporate.

7. A portfolio manager shall not disclose to any clients or press any confidential information

about his clients, which has come to his knowledge.


40/46

40

8. The portfolio manager shall where necessary and in the interest of the client take adequate

steps for registration of the transfer of the clients securities and for claiming and receiving

dividend, interest payment and other rights accruing to the client. He shall also take necessary

action for conversion of securities and subscription of/or rights in accordance with the

clients instruction.

9. Portfolio manager shall ensure that the investors are provided with true and adequate

information without making any misguiding or exaggerated claims and are made aware

of attendant risks before they take any investment decision.

10. He should render the best possible advice to the client having regard to the clients needs

and the environment, and his own professional skills.

11. Ensure that all professional dealings are affected in a prompt, efficient and cost effective

manner.


41/46

41

5.4 SECURITIES AND EXCHANGE BOARD OF INDIA

RULES, 1993 REGARDING PORTFOLIO MANAGERS

1. No person to act as portfolio manager without certificate.

2. No person shall carry on any activity as a portfolio manager unless he holds a certificate

granted by the Board under this regulation.

3. Provided that such person, who was engaged as portfolio manager prior to the coming into

force of the Act, may continue to carry on activity as portfolio manager, if he has made an

application for such registration, till the disposal of such application.

4. Provided further that nothing contained in this rule shall apply in case of merchant banker

holding a certificate granted by the board of India Regulations, 1992 as category I or category

II merchant banker, as the case may be.

5. Provided also that a merchant banker acting as a portfolio manager under the second

provision to this rule shall also be bound by the rules and regulations applicable to a portfolio

manager.


42/46

42

5.5 Conditions to grant or renewal of certificate to portfolio

manager:

The board may grant or renew certificate to portfolio manager subject to the following

conditions namely:

a) The portfolio manager in case of any change in its status and constitution, shall obtain

prior permission of the board to carry on its activities;

b) He shall pay the amount of fees for registration or renewal, as the case may be, in the

manner provided in the regulations;

c) He shall make adequate steps for redressed of grievances of the clients within one month

of the date of receipt of the complaint and keep the board informed about the number, nature

and other particulars of the complaints received;

d) He shall abide by the rules and regulations made under the Act in respect of the activities

carried on by the portfolio manager.

Period of validity of the certificate.

The certificate of registration on its renewal, as the case may be, shall be valid for a period of

here years from the date of its issue to the portfolio manager.


43/46

43

5.6 SECURITIES AND EXCHANGE BOARD OF INDIA

REGULATIONS, 1993

Registration of Portfolio Managers:

1. Application for grant of certificate

An application by a portfolio manager for grant of a certificate shall be made to the board on

Form A.

Notwithstanding anything contained in sub regulation(1), any application made by a portfolio

manager prior to coming into force of these regulations containing such particulars or as near

thereto as mentioned in form A shall be treated as an application made in pursuance of sub-

regulation and dealt with accordingly.

2. Application of confirm to the requirements

Subject to the provisions of sub-regulation (2) of regulation 3, any application, which is not

complete in all respects and does not confirm to the instructions specified in the form, shall

be rejected:

Provided that, before rejecting any such application, the applicant shall be given anopportunity to remove within the time specified such objections as may be indicated by the

board.

3. Furnishing of further information, clarification and personal representation.

The Board may require the applicant to furnish further information or clarification regarding

matters relevant to his activity of a portfolio manager for the purposes of disposal of the

application. The applicant or, its principal officer shall, if so required, appear before the

Board for personal representation.


44/46

44

4. Consideration of application.

The Board shall take into account for considering the grant of certificate, all matters which

are relevant to the activities relating to portfolio manager andin particular whether the

applicant complies with the following requirements namely:

The applicant has the necessary infrastructure like to adequate office space,equipments and manpower to effectively discharge his activities;

The applicant has his employment minimum of two persons who have the experienceto conduct the business of portfolio manager;

A person, directly or indirectly connected with the applicant has not been grantedregistration by the Board in case of the applicant being a body corporate;

The applicant, fulfills the capital adequacy requirements specified in regulation 7 theapplicant, his partner, director or principal officer is not involved in any litigation

connected with the securities market and which has an adverse bearing on the

business of the applicant;

The applicant, his director, partner or principal officer has not at any time beenconvinced for any offence involving moral turpitude or has been found guilty of any

economic offences.

The applicant has the professional qualification from an institution recognized by thegovernment in finance, law, and accountancy or business management.


45/46

45

CONCLUSION

With the help of given project I got an in-depth knowledge about the working of

portfolio management. Also I got an insight as too how to invest in portfolio management,which scheme provide better returns compared to other and who are the portfolio

management players in the Indian market. It can be concluded from the project that future of

portfolio management is bright provided proper regulations prevail and investors needs are

satisfied by providing variety of schemes. The interest of investors is protected by SEBI.

Portfolio management is governed by SEBI Act. Due to the benefits available to the

individuals such as reduction in risk, expert professional management, diversified portfolios,

tax benefits etc. young generation (i.e. age group bet. 18-30) is willing to invest in different

investment avenues through portfolio manager or through mutual funds which are again

managed by portfolio managers. On the other hand, age group of 60 & above are least

interested in making investment in different avenues through portfolio managers. They

believe in investing and managing their portfolio on their own. However, it can be said that

the future of portfolio management is bright in years to come.


46/46

46

CHAPTER 7

BIBLIOGRAPHY

NEWSPAPERS

Times of India Hindustan Times

BIBLIOGRAHPY

Harries & Niel

Banking with Portfolio Management

WEBLIOGRAPHY

www.icicibank.com http://www.portfoliostep.com http://www.pptfun.com

mahendra portfolio management

Documents