study of mutual fund of axis bank

7/26/2019 Study of Mutual Fund of Axis Bank

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SUMMER TRAINING PROJECT REPORT

ON

STUDY OF MUTUAL FUND OF AXIS BANK

AXIS BANK PVT LTD

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF

Master o B!s"#ess A$%"#"strat"o# &MBA'


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ACKNO(LEDGEMENT

The present work is an effort to throw some light on A)"s M!t!a* F!#$+. The work

would not have been possible to come to the present shape without the able guidance,

supervision and help to me by number of people.

With deep sense of gratitude I acknowledge the encouragement and guidance received

by my organizational guide Mr,,,,,,,,,,,,,,,,,,' and other staff members.

I convey my heartful affection to all those people who helped and supported me during

the course, for completion of my Proect !eport.

,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

E#ro**%e#t No,-

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EXECUTIVE SUMMARY

This marketing strategic plan has been written keeping in mind the Indian operations of

banking system. It aims first, at analyzing the banking system in India and finding aplace in it for #$I% '(. It then sets out to describe the target audience for the

product range and finally suggests a host of marketing strategies and activities that will

help #$I% to achieve its target of becoming the )* '(I'+ %%T- in India. The

plan begins with a brief overview of the product category being dealt. It also dwells

briefly on the history of the company and its current position and activities. The proect

moves on to the cru/ of the matter 0 the marketing plan to be followed by #$I% '(

in India. 1irstly, the obectives behind this plan and the core strategy are stated.

2ustomers to be eventually targeted are described and compared with competitors3

customer targets. #fter starting the obectives and reasoning behind them, the actual

marketing programs are described in detail. This includes aspects such as pricing,

advertising, promotion, sales, channels, and the company website.

%uggestions are made on each and every one of these aspects4 improvements and

innovations are recommended. The plan then goes on to the customer analysis section.

The customer base is identified and various segments are pointed out. 5arious criteria

and factors have been taken into consideration while segmenting the market. We have

also tried to ascertain why customers buy these products, how they choose, and what

factors matter most when making their decisions. The last few pages of this marketing

plan deal with the various ways in which the plan, once implemented, can be monitored

and controlled.

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TABLE OF CONTENT

TOPICS PAGE NO,

CHAPTER ./- INTRODUCTION /01

/,/ O2er2"e3 o I#$!str4 as a 35o*e

CHAPTER .6- COMPANY PROFILE 7068

6,/ Pro"*e o t5e or9a#":at"o#

6,6 Pro;*e%s o t5e or9a#":at"o#

6,< Co%=et"t"o# I#or%at"o#

6,> S,(,O,T, A#a*4s"s o t5e Or9a#":at"o#

CHAPTER .,/ Resear@5 o;e@t"2e>,6 Resear@5 $es"9#

>,< Q!est"o##a"re or%!*at"o#

>,> Met5o$o*o94 A$o=te$

>, L"%"tat"o#

CHAPTER .- DATA ANALYSIS AND INTERPRETATION >60>

CHAPTER .1- FINDINGS CONCLUSION 08

CHAPTER .7- RECOMMENDATION ?01

ANNEXURES

BIBLIOGRAPHY

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CHAPTER0 /INTRODUCTION

8


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9


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OVERVIE( OF INDUSTRY AS A (HOLE

The concept of mutual funds in India dates back to the year *:96. The era between *:96

and *:;< marked the e/istence of only one mutual fund company in India with !s. 9?, by the end of its monopoly era, the >nit Trust of India

=#$I%?. &y the end of the ;@s decade, few other mutual fund companies in India took

their position in mutual fund market.

(othari Pioneer was the first private sector mutual fund company in India which has now

merged with 1ranklin Templeton. Aust after ten years with private sector players

penetration, the total assets rose up to !s. *"*;.@8 bn. Today there are 66 mutual fund

companies in India.

The new entries of mutual fund companies in India were %&I utual 1und, 2anbank

utual 1und, Punab 'ational &ank utual 1und, Indian &ank utual 1und, &ank of

India utual 1und.

The succeeding decade showed a new horizon in Indian mutual fund industry. &y the endof *::6, the total #> of the industry was !s. 7


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accounts and contribute !s.6",9:* crores which is 7*.@ndertaking of #$I% =not registered with %-&I? is not available with us.

ii? 2orporates and institutions who form only ".@7D of the total number of investors

accounts in the mutual funds industry, contribute a sizeable amount of !s.78,7


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responsible or liable for any loss or shortfall resulting from the operations of the %chemes

beyond their contribution of !s.*@,@@@EB each made by them towards setting of the

utual 1und The 'ames of the %chemes do not in any manner indicate either the Huality

of the %chemes or their future prospects and returns. Investors in the %chemes are not

being offered any guarantee E assured returns. Please read the Cffer ocuments carefully

before investing.

SEBI OKAYS FIDELITY PLANS

1idelity Investments has received permission from %-&I to launch eHuity funds in India.

1idelity has already filed a draft prospectus with %-&I for its maiden eHuity fund,

1idelity -Huity. The proposed fund will invest across sectors. The portfolio will comprise

9@B;@ stocks. The fund will ordinarily invest up to :8 per cent of its assets in eHuities, but

may invest up to "@ per cent in money market instruments.

%&I utual 1und has launched a midBcap fund, agnum id2ap 1und. It will invest

in stocks with a market capitalization of !s "@@B",@@@ crores. The minimum

investment amount is !s 8,@@@. The fund offers dividend and growth options. The

offer closes on arch *


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1ranklin Templeton utual 1und has proposed a dividend for 1ranklin India

Ta/shield. The record date is arch *;.

G12 utual proposes to declare dividend on G12 Prudence and G12 &alanced

1und. The record date for the dividend will be arch *;.

1ranklin Templeton utual has mopped up !s *,:8@ crores from the initial offering

of 1ranklin 1le/icap. This is the largest amount mobilized by any openBend fund

IPC. The fund will be open for an ongoing basis from arch nitB97 during #pril and ay"@@* when around !s 8,@@@ crores was taken out by big corporate and banks from >nitB

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97, it severely criticized the way the scheme worked. # fundamental flaw was that >nitB

97 lived beyond its means, rewarding unit holders with dividends beyond its capabilities

and propping up the price of >nits well beyond their real worth.

M"**"o# s5ares o DSQ Sot3are or Rs 6,/ @rores,

In the ne/t article we give the recommendations as made by the eepak Parekh

2ommittee

M!t!a* !#$s to ;e %ore Tra#s=are#t

1inance inister ashwant %inha called upon the mutual funds to focus on product

innovation, eHuity research, risk management and market reach, and endeavour to instil

greater confidence among investors.

Ge was addressing the si/th annual seminar of the mutual fund industry in &ombay on

Thursday.

2iting !&I data and the %-&I '2#-! survey, %inha said out that less than ; per cent of

households channelize their savings into capital markets and that ust * per cent of

household investment is in eHuity markets.

Ge also outlined the initiatives %-&I is taking, through the various committees.

#mong the issues under active consideration areF

!eduction in the processing of investor applications in the initial offer period to 7"

days from :@ days4

>se of unclaimed funds lying with mutual funds for investor education4

2reation of level playing field between mutual funds and 1IIs in the conte/t of

international investing

1ormulation a code of conduct and development of best practices in the industry4

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%tandardization of portfolio disclosures4

odification in the structure of mutual funds to company form of organization4 and

Publication of the annual reports of asset management companies.

Ge said that the Indian markets are very safe, despite the growing volatility that has been

seen in the recent period.

#$I% chairman, P % %ubramanian said that the Huality of investor services in the industry

has grown over the years. Ge said there is a scope to increase the penetration and

volumes in the mutual fund industry by reaching out to more investors. Ge noted that

technology has significantly altered the manner in which mutual funds conduct their

business.

In the conte/t of globalization of capital markets, he pointed out that risk management

has become critical for mutual funds. Ge also indicated that corporations will have to

adopt best practices in information disclosure and dissemination.

MARKET PRESENCE

Mo#e4 %aret $e2e*o=%e#t o %!t!a* !#$s

!esource mobilization by utual 1unds improved during *::


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standard offer document, standardization of valuation norms for investments and

computation of '5#. The regulations also sought to address the areas of misuse of funds

by introducing prohibitions and restrictions on affiliate transactions and investment

e/posures to companies belonging to the group of sponsors of mutual funds.

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CHAPTER06

COMPANY PROFILE

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COMPANY PROFILE

6,/ PROFILE OF THE ORGANISATION

#$I% utual 1und, the largest private sector utual 1und company in India with an

asset base of !s "8,8@@ crores, will be the leading 1und anager for +overnment of

IndiaLs newly created 'ational Investment 1und ='I1?.

#nnouncing this #$I% #sset anagement 2ompany anaging irector and 2hief

-/ecutive Cfficer =2-C? > ( %inha told newsmen here this evening that besides the

#$I% utual 1und, the other two leading financial institutions which were short listed

for the massive ob were %tate &ank of India =%&I? and the Jife Insurance

2orporation=JI2? of India.

Ge said the new fund had been created by the 2entre with a view to investing the entire

disinvestment fund into the 'I1 corpus and re invests them in health, education and other

social causes through a calculated manner.

%ince the scheme was still in its preliminary stage, the government was yet to create a

separate corpus for the fund, which was announced only last month.

!eferring to the corporate plan of #$I% utual 1und whose ownership had recently

changed hands following the purchase of its "8 per cent stake each by the countryLs four

leading banks and financial institutions like %&I, &ank of &aroda=&C&?, Punab 'ational

&ank =P'&? and the JI2 last month with a total capital infusion of !s *"69 crores, r

%inha said under the new management they were planning to leverage their own

capabilities with a much higher target oriented growth.

#$I% #2 2-C, however, categorically ruled out the possibility of any clash of interest

among the new stake holders of the company in view of their similar business interest in

terms of utual 1und.

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!eplying to a related Huery he said though each of these institutions had their own mutual

fund businesses, it would not clash in any manner with that of #$I% mutual 1und since

the agreement among them would prevent them from doing so.

In the wake of over 66 per cent growth in the Indian utual 1und industry since #pril

this year, r %inha said it had enabled the #$I% utual 1und to increase its #sset base

by over !s 8,8@@ crores during this period from !s "@,@@@ crores achieved till

arch. KWe are confident to maintain a similar growth path in the coming years too.K

#bout the huge potential and the actual position, r %inha claimed that #$I% utual

1und had already been enoying about 9< per cent domestic market share of the countryLs

around one crores investors in mutual fund products.

#$I% #sset anagement 2ompany became a private company last month with the four

sponsors, Jife Insurance 2orporation of India, %tate &ank of India, Punab 'ational &ank

and &ank of &aroda paying back the government its eHuity worth !s *,"69.:8 crores in

the company. -ach sponsor now owns a "8 per cent stake in the company and under the

terms of the new agreement, the owners will not be allowed to change their shareholding

pattern.

We are also keen to increase our e/posure in the overseas market through the offshore

funds,M said %inha.

#$I% utual 1und is also e/ploring investment opportunities in emerging sectors like

the knowledge process outsourcing, te/tiles and biotech through the private eHuity and

venture capital arm, #$I% 5enture 1unds,M said . %. !. urthy, e/ecutive director,

#$I% #sset anagement 2ompany.

OUR MISSION AND VALUES

I%%IC'

*? 2ustomer service and product innovation tuned to diverse needs of individual and

corporate clientele

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*? 2ontinuous technology up gradation while maintaining human values

"? Progressive globalization and achieving international standards

6? -fficiency and effectiveness built on ethical practices

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CORE VALUES

C!sto%er sat"sa@t"o# t5ro!95 =ro2"$"#9 !a*"t4 ser2"@e

ee@t"2e*4 a#$ e"@"e#t*4

S%"*e "t e#5a#@es 4o!r a@e 2a*!e+"s a ser2"@e !a*"t4 stresse$

o# =er"o$"@ @!sto%er a!$"ts

Ma)"%"sat"o# o stae5o*$er 2a*!e

S!@@ess t5ro!95 tea% 3or"#te9r"t4 a#$ =eo=*e

NE(LY LAUNCHED DEBT FUNDS BY THE AXIS BANK

#/is &ank has launched two debt funds. #/is Treasury #dvantage 1und and #/is

JiHuid 1und. The 'ew 1und Cffer ='1C? price for both the schemes is !s *@@@.

The new fund offer ='1C? subscription open and close on Cctober ;, "@@:.

#/is Treasury #dvantage 1und, is an open ended debt scheme. The investment

obective of the scheme is to provide optimal returns and liHuidity by investing

primarily in a mi/ of money market and short term debt instruments.

The minimum application amount for both the schemes is !s. 8@@@ and in multiples

of !e. * thereafter. The scheme will not charge any entry or e/it load.

The benchmark for the schemes will be 2risil JiHuid 1und Inde/. The fund managers

of both the schemes will be 'inad eshpande and %rira &hattacharee

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T5e %e%;ers o t5e Boar$ are-

S%t, S5"5a S5ar%a anaging irector N 2-C

S5r" M, M, A9ra3a* eputy anaging irector =esignate?

S5r" N,C, S"#95a* irector

S5r" J,R, Var%a irector

Dr, R,H, Pat"* irector

S%t, Ra%a B"a=!rar irector

S5r" R,B,L, Va"s5 irector

S5r" M,V, S!;;"a5 irector

S5r" K, N, Pr"t52"ra irector

*:


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ORGANISATIONAL STRUCTURE

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"*


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MUT UAL FUNDS 0 INVESTMENT OBJECTIVES AND VALUATION

POLICIES

(5at are M!t!a* F!#$s

# utual fund is an organization that invests in a diversified portfolio of financial

securities on behalf of a pool of subscribers to its schemes. These securities can be in the

form of eHuity, debt instruments, money market instruments etc., or a mi/ of these

securities, depending on the scheme obectives.

(54 "s "t s!@5 a 9oo$ "$ea to "#2est "# M!t!a* F!#$s

D"2ers""@at"o#- utual 1unds invest their corpus in diversified portfolio3s which

reduces the risk contained in the investment. This also means that you can invest

small sum of !s.8@@@EB and still be a part of a portfolio where the market value of single

scrip might be much more than the total investment.

Resear@5- These mutual funds perform an e/tensive research of the company beforemaking an investment decision giving you the benefit of e/pert advice.

L"!"$"t4- These funds are e/tremely liHuid4 some of them even have features like

acrossBtheBcounter redemption. This feature is especially useful at times when the market

is rising or falling.

Proess"o#a**4 Ma#a9e$- These funds are managed by professionals who have the

reHuired e/pertise in buying and selling stocks. #s a result they make better decisions on

entering and e/iting a particular stock, which is very crucial for the overall performance

of a portfolio. oreover, mutual fund investment also rids the investor of maintaining

records, eliminates hassles with the broker for payment, delivery and other arduous back

office tasks.

Sa2"#9s o# tra#sa@t"o# @osts- #s purchases and sales are done in bigger Huantities, the

funds also get the advantages of lesser brokerage and other reduced transaction costs.

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A$2a#ta9es- In India these funds become even more attractive because of the ta/

advantages, like inde/ation benefits , long term capital gains ta/ , ta/ free dividends and

much more.

INVESTMENT OBJECTIVE &REGULATION- >


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the same time and in the same proportion. ou achieve this diversification through a

utual 1und with far less money than you can do on your own.

8, Co#2e#"e#t A$%"#"strat"o#

Investing in a utual 1und reduces paperwork and helps you avoid many problems such

as bad deliveries, delayed payments and unnecessary follow up with brokers and

companies. utual 1unds save your time and make investing easy and convenient.

?, Ret!r# Pote#t"a*

Cver a medium to longBterm, utual 1unds have the potential to provide a higher return

as they invest in a diversified basket of selected securities.

/, Lo3 Costs

utual 1unds are a relatively less e/pensive way to invest compared to directly investing

in the capital markets because the benefits of scale in brokerage, custodial and other fees

translate into lower costs for investors.

Gro3t5 o %!t!a* !#$ "# I#$"a

The Indian utual fund business has passed through three phases. The first phase was

between *:97 and *:;nit Trust of India, which had a

total asset of !s. 9,


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NET ASSETS OF MUTUAL FUNDS AS AT


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around 6@@ million. # typical Indian middle class family can have liHuid savings ranging

from !s." to !s.*@ Jacs today. Investments in &anks are liHuid and safe, but with the

falling rate of interest offered by &anks on eposits, it is no longer attractive. #t best a

part can be saved in bank deposits, but what is the other sources of investment for the

common manO utual 1und is the ready answer. 5iewed in this sense globally India is

one of the best markets for utual 1und &usiness, so also for Insurance business. This is

the reason that foreign companies compete with one another in setting up insurance and

mutual fund business units in India. The sheer magnitude of the population of educated

white collar employees provides unlimited scope for development of utual 1und

&usiness in India.

The alternative to mutual fund is direct investment by the investor in eHuities and bonds

or corporate deposits. #ll investments whether in shares, debentures or deposits involve

riskF share value may go down depending upon the performance of the company, the

industry, state of capital markets and the economy4 generally, however, longer the term,

lesser the risk4 companies may default in payment of interestE principal on their

debenturesEbondsEdeposits4 the rate of interest on an investment may fall short of the rate

of inflation reducing the purchasing power. While risk cannot be eliminated, skillful

management can minimize risk. utual 1unds help to reduce risk through diversification

and professional management. The e/perience and e/pertise of utual 1und managers in

selecting fundamentally sound securities and timing their purchases and sales, help them

to build a diversified portfolio that minimizes risk and ma/imizes returns.

BRIEF HISTORY

FIRST PHASE 0 /?1>087

>nit Trust of India =#$I%? was established on *:96 by an #ct of Parliament. It was set

up by the !eserve &ank of India and functioned under the !egulatory and administrative

control of the !eserve &ank of India. In *:nit %cheme *:97. #t

the end of *:;; #$I% had !s.9,


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SECOND PHASE 0 /?870/??< &ENTRY OF PUBLIC SECTOR FUNDS'

-ntry of nonB#$I% mutual funds. %&I utual 1und was the first followed by 2anara

bank utual 1und =ec ;


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CONCEPT

There are many entities involved and the diagram below illustrates the organisational set

up of a mutual fundF

Or9a#":at"o# o a M!t!a* F!#$

FEATURES

>niHue 1eatures of #$I% their Impact on its 1unctioning -/tract from the !eport of

K2orporate PositioningK 2ommitteeQ

In the initial stages, #$I% had been performing a hybrid role of both a financial

institution and a mutual fund. Gowever, over the last few years, its role as a financial

institution has significantly diminished and it has positioned itself purely as the largest

mutual fund in the country. There is also a significant trend emerging which suggests that

financial institutions will gradually wither away or merge into universal banks. In this

scenario, commercial banks and mutual funds will emerge as the primary institutions for

the mobilization of household savings. This reinforces the need for #$I% to evolve as a

pure mutual fund. #t the same time, consideration has to be given to the fact that #$I%

has promoted and holds controlling interest in a number of institutions outside the pure

mutual fund industry.

THE OBJECTIVES OF ASSOCIATION OF MUTUAL FUNDS IN

INDIA

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The #ssociation of utual 1unds of India works with 6@ registered #2s of the country.

It has certain defined obectives which u/taposes the guidelines of its &oard of

irectors. The obectives are as followsF

This mutual fund association of India maintains high professional and ethical

standards in all areas of operation of the industry.

It also recommends and promotes the top class business practices and code of

conduct which is followed by members and related people engaged in the activities of

mutual fund and asset management. The agencies who are by any means connected or

involved in the field of capital markets and financial services also involved in this code of

conduct of the association.

#1I interacts with %-&I and works according to %-&I3s guidelines in the mutual

fund industry.

#ssociation of utual 1und of India does represent the +overnment of India, the

!eserve &ank of India and other related bodies on matters relating to the utual 1und

Industry.

It develops a team of well Hualified and trained #gent distributors. It implements a

program of training and certification for all intermediaries and other engaged in the

mutual fund industry.

#1I undertakes all India awareness program for investors in order to promote

proper understanding of the concept and working of mutual funds.

#t last but not the least association of mutual fund of India also disseminate

information on utual 1und Industry and undertakes studies and research either directly

or in association with other bodies.

T5e @o#sorters o Asso@"at"o# o M!t!a* F!#$s "# I#$"a

BANK SPONSORED

%&I 1und anagement Jtd.

&C& #sset anagement 2o. Jtd.

2an bank Investment anagement %ervices Jtd.

6@


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#$I% #sset anagement 2ompany Pvt. Jtd.

INSTITUTIONS

+I2 #sset anagement 2o. Jtd.

Aeevan &ima %ahyog #sset anagement 2o. Jtd.

PRIVATE SECTOR INDIAN-B

&ench ark #sset anagement 2o. Pvt. Jtd.

2holamandalam #sset anagement 2o. Jtd.

2redit 2apital #sset anagement 2o. Jtd.

-scorts #sset anagement Jtd.

A 1inancial utual 1und

(otak ahindra #sset anagement 2o. Jtd.

!eliance 2apital #sset anagement Jtd.

%ahara #sset anagement 2o. Pvt. Jtd

%undaram #sset anagement 2ompany Jtd.

Tata #sset anagement Private Jtd.

PREDOMINANTLY INDIA JOINT VENTURES-0

&irla %un Jife #sset anagement 2o. Jtd.

%P errill Jynch 1und anagers Jimited

G12 #sset anagement 2ompany Jtd.

PREDOMINANTLY FOREIGN JOINT VENTURES-0

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#&' #!C #sset anagement =I? Jtd.

#lliance 2apital #sset anagement =India? Pvt. Jtd.

eutsche #sset anagement =India? Pvt. Jtd.

1idelity 1und anagement Private Jimited

1ranklin Templeton #sset gmt. =India? Pvt. Jtd.

G%&2 #sset anagement =India? Private Jtd.

I'+ Investment anagement =India? Pvt. Jtd.

organ %tanley Investment anagement Pvt. Jtd.

Principal #sset anagement 2o. Pvt. Jtd.

Prudential I2I2I #sset anagement 2o. Jtd.

%tandard 2hartered #sset gmt 2o. Pvt. Jtd

#$I% utual 1und ties up with ena &ank for distributing its 1 schemes

#$I% utual 1und =#$I% 1? and ena &ank today announced a strategic tieBup

for distribution of #$I% 1 schemes. >nder the agreement, ena &ank will offer the

entire bouHuet of #$I% 1Ls schemes across the bankLs selected branches

Se=te%;er /6 6-#$I% utual 1und =#$I% 1? and ena &ank today announced a

strategic tieBup for distribution of #$I% 1 schemes. >nder the agreement, ena &ank

will offer the entire bouHuet of #$I% 1Ls schemes across the bankLs selected branches.

Presently #$I% 1 =with assets under management of over !s."8@@@ crores? reaches out

to its investors through its wide distribution network comprising 98 1inancial 2enters

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strategy in the Indian mutual fund sector. With this tieBup millions of customers of ena

&ank will get an opportunity to invest in various schemes of #$I% 1 closer to their

doorstep at the branches where they do their banking transactions.K

Kena &ank has got a dominant presence in +uarat and aharashtra which happen to be

important retail markets for #$I% 1.K he added

DEFINITION OF IMPORTANT TERMSCONCEPTS IN MUTUAL

FUND INDUSTRY

&efore proceeding to consider the salient provisions of %-&I regulations governing

mutual funds, it is necessary to get familiar with the basic terms and phraseology used in

utual 1und literature.

Net Asset Va*!e &NAV'-The performance of a particular scheme of a mutual fund is

denoted by 'et #sset 5alue ='#5?. utual funds invest the money collected from the

investors in securities markets. In simple words, 'et #sset 5alue is the market value of

the securities held by the scheme. %ince market value of securities changes every day,

'#5 of a scheme also varies on day to day basis. The '#5 per unit is the market value

of securities of a scheme divided by the total number of units of the scheme on any

particular date. 1or e/ample, if the market value of securities of a mutual fund scheme is

!s "@@ lakhs and the mutual fund has issued *@ lakhs units of !s. *@ each to the

investors, then the '#5 per unit of the fund is !s."@. '#5 is reHuired to be disclosed by

the mutual funds on a regular basis B daily or weekly B depending on the type of scheme.

(54 s5o!*$ o#e "#2est "# M!t!a* F!#$s t5ro!95 AXIS Ba#

(e %eet 4o!r #ee$s- We believe that every one has specific needs and priorities. our

needs could vary from buying a house, getting your daughter married to providing for

your child3s education. ou might even want to travel the world. #ll your needs are very

important for us. We can help to fulfill your needs to reality by helping you select

schemes, which would be consonance with your needs.

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(e 3or to3ar$s ;!"*$"#9 a# I#2est%e#t C!*t!re- It would be our constant

endeavor to inculcate saving and organized investing habits in you. We will help you plan

your investments and build a healthy mutual fund portfolio, which would be an optimal

solution for your needs. 2ultivating an investment culture will not only help you but also

your family.

("t5 AXIS Ba#0 utual 1und services, you can consult with your own Investment

#dvisor and invest in a utual 1und %cheme that is right for you. # great opportunity, to

get organized and make your investment more in line with your real needs.

R"s Fa@tors-#ll the investments in the securities market are subect to market risks and

the '#5 of schemesEplans may go up or down depending upon the factors and forcesaffecting securities market. Past performance is not necessarily indicative of the future.

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6 ,6 PROBLEMS OF THE ORGANIATION

#$I% &ank personal loaning is about the futureRthe secure and comfortable future

one would like to provide for himself and his loved ones. When a person plan for that

future, he starts with his goals, identifying the things he had like to be able to afford, what

they3ll cost and when he will need the money to pay for them. The ne/t step is creating a

strategy for accomplishing those goals. Ge will discover that saving and investing are

essential to #$I% &ank personal loaningRand that if he wishes, he can find someone

with professional e/perience to help him decide how to make the most of the money he

already has. #nother part of planning is writing a will or perhaps creating a trust that lets

a person create a legacy by sharing the assets he has accumulated with the people or

organizations he had want.

%ome people know e/actly what their &ank goals are. #nd some do not. Cr maybe

they are spending all their energy managing their current &ank situation. If that3s the

case, it may take a special effort to concentrate on what one thinks is important for the

future. &ut one will find it3s worth the time to consider the ne/t 8, "@ and 7@ years of his

life to anticipate where he had like to be when that time arrives. There are some goals that

most people shareF staying out of debt, owning a home, and having a secure retirement.

Cthers may be more specific to paying for children3s college tuition or starting one3s own

small business. There are no right answers about what the goals should beRwith the

possible e/ception that most people have to be concerned about affording a &ankly

secure retirement. That3s why each person3s plan is uniHue.

In industrialized countries, the ourney through life tend to go through stages. The

stage we find our self in will have an impact on our #$I% &ank personal loaning.

odigliani and &rumberg =*:87? devised a model to e/plain these stages.

68


36/85

6,< COMPETITION INFORMATION

ICICI BANK

Joans are for salaried N self employed individuals

Joans are available from !s. "@@@@ to !s. *8 lakhs Tenures from *" to 9@ months

'o security N guaranter reHuired

#ll loans are done via -IB eHuated monthly installments

Processing fees of "D

6 months bank statement

Jatest " salary slips

Jatest " years IT!

Proof of turnover, proof of continuity current ob,I proof, residence proof, office

proof .

HDFC Ba#

-I as low as !s. 69 per !s. *@@@ per month for 69 months N

8@D off processing fees.

5 6 months bank statement

5 'o security and guranter reHuired

5 Joans are available for salaried as well as self employed people.

Ba I#$"a

Personal loans for as low as *;D per annum for 8 years.

v Tenure from *"B7; months.

5 Joans are available from "@@@B*@ lakhs

SBI

TermB " years, the total amountB *@@@@@ =**,


37/85

6,> S,(,O,T, ANALYSIS OF ORGANISATION

#$I% is a statutory corporation established under the >nit Trust of India, #ct *:96 with a

view to encouraging saving and investment and participation in the income, profits and

gains accruing to the 2orporation from the acHuisition, holding, management and

disposal of securities. The #ct came into force on *st 1ebruary *:97.

The initial capital of #$I% was !s.8 crores which has been contributed as underF

!eserve &ank of India =!&I? !s.".8@ crores

Jife Insurance 2orporation of India =JI2? !s.@.


38/85

Its nationBwide well entrenched distribution network and conseHuently its wide

reach and capacity to mobilize large resources4

Its brand image arising out of a public Its large size with conseHuential economies

of scale4

Its nationBwide well entrenched distribution network and conseHuently its wide

reach and capacity to mobilize large resources4

Its brand image arising out of a public perception that the safety of funds is

assured by its pseudo +overnment character, which may not be entirely

unustified.

The fact that it does not have an #2 to whom management fees would have to

be paid which results in higher returns available to unit holders.

(EAKNESSES

#/is bank has to face competition from the other banks.

It is very difficult to create a brand.

emands of today3s customer is very high ,therefore it becomes a tough ob to

satisfy the customers.

OPPORTUNITIES

Increasing market of the mutual funds.

#vailability of the improved and latest technology.

#/is can get success or high profits by fulfilling the unfulfilled needs of thecustomers.

6;


39/85

#s the education level in the country is improving there are a lots of investors

who are investing in the mutual funds.

THREATS

With the increase in the no. of investors there is also increase in the no. of the new

competitors in the market.

The mutual fund is totally a technology based business which is Huite comple/.

CHAPTER0T!#J **

=? %#TI%1I- "@

=-? 5-! %#TI%1I- *6

TCT#JF8@

ICICI BANK

SATISFACTION LEVEL OF CUSTOMERS NO, OF PERSONS

=#? 5-! I%%#TI%1I- *=&? I%%#TI%1I- T!#J *"=? %#TI%1I- *9

=-? 5-! %#TI%1I- *@

TCT#JF

ICICI BANK

SATISFACTION LEVEL OF CUSTOMERS NO, OF PERSONS

=#? 5-! I%%#TI%1I- 7=&? I%%#TI%1I- *@

=2? '->T!#J **

=? %#TI%1I- *8

=-? 5-! %#TI%1I- *@

TCT#JF

GRAPHICAL REPRESENTATION OF COMPARISON IN IN0BRANCH

SERVICES-0

96

0

10

20

30

40

50

0

'0

!0

(0

100

1 2 3 4 5

I2I2I

#$I%


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ANALYSIS

If we analyze the aggregate satisfaction level, satisfaction level of I2I2I '( in MI'B

&ranch servicesM is *.8D more than #$I% '( and dissatisfaction level is less than

#$I% '(.

INTERPRETATION

If we analyze the aggregate satisfaction level , satisfaction level of #$I% '( in Mease

in accessing the accountM is *.;D more than I2I2I '(

Q07-0 Do 4o! 5a2e =ro=er #o3*e$9e a;o!t t5e @o#@e=t o %!t!a* !#$

es 'o Partial, I would like to know more

79 "* ;6

97


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)es

31*

$o

14*

+artia,- I wou,d

,i.e to .now

more

55*

F"#$"#9-#s per the above pie chart 6*D respondents had proper knowledge about the

mutual funds and *7D hid not have proper knowledge about the mutual fund. 88D

respondents wanted to know about the mutual funds as they had partial knowledge about

the mutual funds.

98


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Q08-0I 4o! =reer %!t!a* !#$s as 4o!r 3a4 o "#2est%e#t t5e# "#

35"@5 "#$ o %!t!a* !#$ 4o! 3o!*$ =reer

-Huity ebt &alanced*"@ *< *6

/quity

!0*

et

11*

Ba,anced

(*

F"#$"#9F #s per the above pie chart ;@D respondents prefer eHuity funds, **D

respondents prefer debt fund and :D preferred balanced funds.

99


67/85

Q08-0Ho3 %!@5 o 4o!r tota* =orto*"o "s "# e!"t4

@B"8D "9B8@D 8*B


68/85

COMPONENT MATRIX &A'

2omponent

* "

2reditUJimit B.8@8 .


69/85

CHAPTER 01

FINDINGS CONCLUSION

9:


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FINDINGS

The advantages of investing in a utual 1und areF

D"2ers""@at"o#- The best mutual funds design their portfolios so individual

investments will react differently to the same economic conditions. 1or e/ample,

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

diversified portfolio to decrease in value. Cther 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.

Proess"o#a* Ma#a9e%e#t- ost mutual funds pay topflight professionals to

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

buy and sell.

Re9!*ator4 o2ers"95t- utual funds are subect to many government regulations

that protect investors from fraud.

L"!"$"t4-ItLs easy to get your money out of a mutual fund. Write a check, make

a call, and youLve got the cash.

Co#2e#"e#@e- ou can usually buy mutual fund shares by mail, phone, or over

the Internet.

Lo3 @ost-utual fund e/penses are often no more than *.8 percent of your

investment. -/penses for Inde/ 1unds are less than that, because inde/ funds are

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

listed on a specific inde/

Transparency

1le/ibility

2hoice of schemes

Ta/ benefits

Well regulated


71/85

REGULATION- GETTING BETTER

Through trial and error, %-&I has steadily improved its regulation of the mutual fund

industry. 2orporate governance is better than before, but the last mile has still to be

negotiated before investor confidence can be taken for granted

Gow well is the Indian mutual funds industry regulatedO If you were to look at media

headlines over the last couple of years, the regulator3s report card might well have carried

this commentF 'eeds improvement.

Till recently, the industry played host to several Huestionable practices 0 late trading

=where big corporate investors got to invest at favorable prices of the previous day?,

scheme switching =shifting investments between schemes within the same fund? and

e/cessive incentivisation for selling mutual fund schemes, among others.

#dd the peccadilloes of #lliance utual 1und3s star 2IC %amir #rora, which got %-&I

Huite worked up, and the picture doesn3t look too good.

&ut if you were to ask %-&I chairman +.'.&apai, he is certain that things are not as bad

as the media paints them. Whenever instances of malpractice have come to our notice,

we take action,M he says.

#nd to be fair to the regulator, the mutual fund business has not seen any maor upheaval

of the kind where investors have actually ended up losing money. The only case which

came close to this is that of the >nit Trust of India =#$I%?, but the fact is that the

government stepped in to prevent investors from losing too much.

# maority of private sector mutual funds have managed to outperform their benchmarks,

drawing little ire from investors. %ome of them do, in fact, charge fairly high fees, but

good market performance has made the case for lower fees not as compelling as in

#merica.


72/85

-ven in the case of late trading 0 which has been more or less the norm in an industry

where big corporate and distributors negotiate terms with mutual funds on a regular basis

0 malpractices have not been as rampant as in #merica.

CONCLUSION

While the mutual fund industry, thanks to its relatively small size till recently, has a bias

towards large corporate investors, governance standards overall have improved, aided

undoubtedly by significant regulatory changes over the last few years.

The only thing to complain about is that %-&I plugged the holes in the system by

following a trialBandBerror approach, and not necessarily proactively. The regulatoryregime was tightened bit by bit, aided by %-&I3s e/periences and market forces. The pace

of regulation has actually accelerated in the last few years.

uring "@@"B@6, for e/ample, the regulator put out detailed guidelines on corporate

governance practices for asset management companies =#2s?. Cne of these was the

introduction of compulsory benchmarking of a fund3s performance against any chosen

inde/. .

This year, %-&I has also made it mandatory for the board of trustees to have twoBthirds of

its strength as independent directors 0 that is, those who are not associates of the sponsors

#nother area of longBterm concern is share switching. %-&I has not, so far, found a

foolproof way to prevent mutual funds from switching securities between schemes.

We regularly hold talks with #1I and, in addition to that, we have a mutual fund

advisory committee consisting of people who are not drawn from the mutual fund


73/85

sector,M he says. With barely two per cent of household savings going into mutual funds,

the segment has a lot of catching up to do. With postBoffice administered schemes and

bank deposits offering competition, more investors can be enticed to the mutual fund

industry only if it is steadily seen as very investorBfriendly. Initiatives have set the

industry in the right direction, but the final destination is still some distance away.

STRUCTURE

The structure of #$I% should be in line with %-&I regulations as applicable to mutual

funds. #ccordingly there should be a %ponsor, # Trustee 2ompany and #n #sset

anagement 2ompany =#2?. The %ponsor should be a %ponsoring 2ompany in which

7@D of the share capital should be held by the institutions which hold the initial capital of

#$I% of !s.8 crores and which have made in *:::, the additional contribution of

!s.778.8 crores pursuant to the eepak Parekh 2ommittee recommendations.=the

%ponsoring Institutions?. 9@D of the share capital of the %ponsoring 2ompany should be

held by a %trategic Partner who is a recognized player in the market and whose reputation

and competence are e/pected to give the reHuired degree of confidence to the unit

holders. The field for the selection of the %trategic Partner need not be restricted to Indian

entities. The suggested share capital of the %ponsoring 2ompany should be !s.88@ croresof which !s.""@ crores will be subscribed by the %ponsoring Institutions and !s.66@

crores by the %trategic Partner.

To make the desired contributions, each of the %ponsoring Institutions should convert

part or whole of their e/isting holdings in >nitB97 forming part of the initial capital of

!s.8 crores and the additional contribution of !s.778.8. crores into shares of the

%ponsoring 2ompany. #s some of the %ponsoring Institutions also own #2s which

manage mutual funds competing with #$I%, no single %ponsoring Institution should hold

more than "8D of the share capital of the %ponsoring 2ompany. To ensure that the

confidence of the unitBholders should not be adversely affected by a sudden withdrawal

of the +overnment umbrella, there should be a LlockBinL period of three years during

which the %ponsoring Institutions may transfer their shareholding in the %ponsoring

2ompany amongst themselves but not to the %trategic Partner or to third parties.


74/85

CHAPTER 07

RECOMMENDATON


75/85

RECOMMENDATION

Initial contributors to #$I% should infuse permanent funds of at least !s.8@@ crores.

The P%> portfolio should be transferred at book value to a %pecial >nit %cheme =%>%

::? to be subscribed for by +CI by the issue of dated +CI securities.

>%B97 should make a strategic sale of its significant eHuity holdings by negotiation to the

highest bidder to ensure fetching the best value for the unit holder. The investment subB

limit of !s.*@,@@@ for ta/ benefit on -Huity Jinked %avings %chemes should be removed

and benefit should be e/tended to >%B97 and all schemes investing more than 8@D ineHuity. Income distributed by >%B97 and schemes investing more than 8@D in eHuity

should be e/empt from ta/. 'ew schemes for investing in growth stocks in IT, Pharmacy

and 12+ sectors should be launched, to be subscribed for by banks. The size of the

#$I% &oard should be increased to *8, with additional five members being coBopted by

the &oard. Trustees should assume higher degree of responsibility and e/ercise greater

authority.


76/85

The remuneration of Trustees should be increased and their attendance record be

published in the #nnual !eport. There should be a separate #sset anagement 2ompany

for >%B97 with an independent &oard of irectors. 2hinese walls should be created by

appointing separate and independent fund managers for each scheme.

InterBscheme transfers must be based on independent decisions and reHuirements of

concerned fund managers and at market determined prices. There should be an

independent fund manager for >%B97 with full responsibility and accountability.

US01> s5o!*$ ;e NAV $r"2e# 3"t5"# t5ree 4ears,

If at the end of the three year period, the reBpurchase price and the '#5 are not in line,

the Trust will be left with no alternative but to seek +CI support once again the provide

the difference between the '#5 and the repurchase price. Cnly a clear commitment from

the +CI to stand by >%B97 till it finally assumes the character of a '#5 driven scheme

will instill the reHuired confidence in the >%B97 investors.

The spread between sale and repurchase prices should be gradually increased to detershort term investors.

The dividend distribution policy needs to follow a more conservative approach to

build up sufficient reserves during periods of good performances.

#s a rule, dividends need to be curtailed when there is inadeHuate income.

The rate of return offered to investors needs to be reviewed on a periodic basis. The

yield offered on >%B97 is e/cessively high as compared to other comparable instruments.

The composition of the portfolio needs to be changed to provide for more weightage

to debt consistent with the obectives of the %cheme.

The operations of >%B97 should be brought under %-&I purview at the earliest.

.


77/85

No G!ara#tees-'o 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. Gowever, anyone who invests through a mutual

fund runs the risk of losing money.

Fees a#$ @o%%"ss"o#s- #ll funds charge administrative fees to cover their dayBtoBday

e/penses. %ome funds also charge sales commissions or KloadsK to compensate brokers,

financial consultants, or financial planners. -ven if you donLt use a broker or other

financial adviser, you will pay a sales commission if you buy shares in a Joad 1und.

Ta)es- uring a typical year, most actively managed mutual funds sell anywhere from "@

to


78/85

ANNEXURES


79/85

ANNEXURES

SAMPLE QUESTIONNAIRE

Q/' (54 $o 3e "#2est "# %!t!a* !#$

+rowth

Income

Ta/ benefit

JiHuidity

Q6' (5o 5as s!99este$ 4o! to "#2est "# t5"s %!t!a* !#$

#gent

1riend

'ewspaper

T5

Q


80/85

Q>' (5at are t5e s@5e%es o 4o!r %!t!a* !#$

=Tick the bo/ under the option that you think is appropriate?

-Huity JiHuid ebt Inde/ 1i/ed

Q' Ho3 %a#4 =eo=*e ee* ease "# a@@ess"#9 a@@o!#t


5ery

dissatisfied

issatisfied neutral %atisfied 5ery

satisfied

Q1' (5at "s t5e sat"sa@t"o# *e2e* o @!sto%er !s"#9 "# ;ra#@5 ser2"@es


5ery

dissatisfied

issatisfied 'eutral %atisfied 5ery

satisfied

Q7' Do 4o! 5a2e =ro=er #o3*e$9e a;o!t t5e @o#@e=t o %!t!a* !#$

es

'o

Partially

;@


81/85

Q8' I 4o! =reer %!t!a* !#$s as 4o!r 3a4 o "#2est%e#t t5e# "# 35"@5 "#$ o

%!t!a* !#$ 4o! 3o!*$ =reer

-Huity

ebt

&alanced

Q0?' Ho3 %!@5 o 4o! tota* =orto*"o "s "# e!"t4

@B"8D

"9B8@D

8*B


82/85

TOTAL />7766>87 /?778>87

ASSETS

2ash and balances with :,7*,:",*@6


83/85

other income ",;:,9;,


84/85

BIBLIOGRAPHY

;7


85/85

BIBLIOGRAPHY

BOOKS

(CTJ-! PGIJIP, #!(-TI'+ #'#+--'T, 5olume B9th, #22-%% I' *@TG

A>J "@@&JI2#TIC',

#22-%% I' *8TGA>'- "@@'I5-!%IT P!-%% AC>!'#J%

(EB SITES

www.a/isbank.com

www.mutualfundsindia.com

www.gemoney.in
http://www.gemoney/http://www.gemoney/

study of mutual fund of axis bank

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