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A project report on study of banking products and investment behavior of consumers

A project report on study of banking products and investment behavior of consumers

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A project report on study of banking products and investment behavior of consumers A project report on study of banking products and investment behavior of consumers Document Transcript

  • Report on Study of Banking Products and Investment Behavior of consumersSummer Project Report Submitted For the Partial Fulfillment of Two Years Full Time Post Graduate Diploma of Management (2007-2009)Project supervisor Project by Jaipuria Institute of Management Noida
  • ACKNOWLEDGEMENTI wish to express my gratitude to Standard Chartered Bank’s management forgiving us an opportunity to be a part of their esteem organization and enhanceour knowledge by granting permission to do our summer training project undertheir guidance.The project of the kind, that I am fortunate enough to be involved in, needed thevision, guidance and expertise of various persons. Thus it was the vision, untiringguidance and on-hand support and help of …………………………………. whichactually allowed me to do justice to the given topic.I am grateful to …………………………………, our guide, for his invaluableguidance and cooperation during the course of the project. He provided us withhis assistance and support whenever needed that has been instrumental incompletion of this project.Finally I would like to thank the members of my family and all my friends for theirsupport and encouragement.The learning during the project was immense & invaluable. Our work basicallyincluded the study of various financial products of the bank and understandingthe customer investing patterns. The present report is an amalgamation of ourthoughts and our efforts to study the present banking and investment scenarioand market potential for the sale of products like ULIP and Mutual Funds.
  • EXECUTIVE SUMMARYThe title of the project is to study the banking product and investment behavior ofconsumers while the objective of project is to find out the potential customers forStandard Chartered bank and to find the investment behavior of investors whichwould help the bank personal to decide proper strategy to tap a larger marketThe …………………………… manages the entire sales functions of north zone ofStandard Chartered bank. He wants to provide such type of products andservices which can satisfy to his customers. He also suggests some strategicand innovative ideas for improvement.Chapter 1– The Indian banking system deals with introduction of theinvestment scenario in India and the investment process. Standard Charteredbank deals with the history of the bank, products offered by it and extensivestudy of savings account, ULIP, and mutual fund.Chapter 2 Introduction to study deals with scope and need of study,Objective of the Study provides the direction to the study means it defines thestrategy to achieve the objective of the study.Chapter 3 Research Methodology defines all those method by which theresearcher has done the research.Chapter 4 Review of Relevant Literature literatures were reviewed tounderstand the changes in banking system and modification of banks as per theneed of the consumers.Chapter 5 Findings and Analysis contains the survey outputs relatinginvestment behavior using SPSS software, and analysis of the output.Chapter 6 Conclusion, Limitations and Suggestions concludes the wholestudy by telling limitations and suggestions.
  • Table ContentsS.No. PARTICULAR PAGE NO. i. Company Certificate i ii. College Certificate ii iii. Acknowledgement iii iv. Executive Summary iv Lists of Figures Lists of TablesChapter 1. Introduction - The Indian Banking System 1.1 The Current State and Road Ahead 1 1.2 New Business Opportunities 2 1.3 Major foreign banks in India 2-3 1.4 Investment Strategies in India 3-4 1.5 Introduction to Standard Chartered 4-7 1.6 Products offered by Standard Chartered 7-8 1.7 Savings account 8 -11 1.8 ULIP (Unit Linked Insurance Plan) 12 - 28 1.9 Concept of mutual fund 29 - 40Chapter 2. Introduction to the Study 2.1 Needs of study 41 - 42 2.2 Scope of study 42 - 43 2.3 Objective of study 43Chapter 3. Research Methodology 44Chapter 4. Review of Relevant Literature 45 - 46Chapter 5. Findings and Analysis 47 - 57
  • Chapter 6. Conclusion, Limitation and Solutions 6.1 Conclusion 58 6.2 Limitations 59 6.3 Suggestions 59 - 60AppendixBibliographyMiscellaneous
  • Lists of FiguresS.No. Particulars Page No.Chapter 1 Introduction - The Indian Banking System 1.1 New business opportunity tapped by banks 2 1.2 Mutual fund operation flow chart 29Chapter 7 Findings and Analysis 5.1 Age group pie chart 47 5.2 Type of investor according to age 48 5.3 Investment made as per age 49 5.4 Investment made as per income 50 5.5 Influence pie chart 51 5.6 Factors affecting investment decision 52 5.7 Reinvestment as per age 53 5.8 Reinvestment as per income 53 5.9 Investment horizon as per age 53 5.10 Investment horizon as per income 54 5.11 Maturity sum use as per age 55 5.12 Maturity sum use as per income 56
  • Lists of TablesS.No. Particulars Page No.Chapter 1 introduction to Indian banking system 1.1 Parameters and service charges charged by bank 10 - 11 1.2 ULIP expense table 16 1.3 Comparison table of ULIP 28Chapter 5 Findings and Analysis 5.1 Age distribution 47 5.2 Influence frequency chart 51 5.3 Factor affecting investment decision 52
  • Chapter- 1 INRODUCTION The Indian Banking System1.1 The Current State and Road AheadIndia’s banking sector is growing at a fast pace. India has become one of themost preferred banking destinations in the world. The reasons are numerous: theeconomy is growing at a rate of 8%, Bank credit is growing at 30% per annumand there is an ever-expanding middle class of between 250 and 300 millionpeople (larger than the population of the US) in need of financial services. All thisenables double-digit returns on most asset classes which is not so in a majorityof other countries. Foreign banks in India achieving a return on assets (ROA) of3%, their keen interest in expanding their businesses is understandable. Indianmarkets provide growth opportunities, which are unlikely to be matched by themature banking markets around the world. Some of the high growth potentialareas to be looked at are: the market for consumer finance stands at about2%-3% of GDP, compared with 25% in some European markets, the real estatemarket in India is growing at 30% annually and is projected to touch $ 50 billionby 2009, the retail credit is expected to cross Rs5,70,000 crore by 2010 fromthe current level of Rs1,89,000 crore in 2004-05 and huge SME sector whichcontributes significantly to India’s GDP.In order to gain further access to the global trade, the government is expandingthe Free Trade Agreements (FTA’s) with many countries (like Singapore,Thailand, and other ASEAN members). After the Comprehensive Economic Co-Operation Agreement (CECA) with Singapore, the government is now planning asimilar deal with the 25-member European Union. The EU is also likely to askIndia to liberalize its financial sector on the lines of the India-Singapore CECA.
  • 1.2 New Business OpportunitiesWith the interest income coming under pressure, banks are urgently looking forexpanding fee-based income activities. Banks are increasingly getting attractedtowards activities such as marketing mutual funds and insurance policies,offering credit cards to suit different categories of customers and services suchas wealth management and equity trading. These are indeed proving to be moreprofitable for banks than plain vanilla lending and borrowing. New Business Opportunities tapped by banks Derivatives Trading 36.8% Wealth Selling of Mutual Management Funds 73.6% 21.05% Forex Management 68.4% Bancassurance 73.6% Fig 1.1 New business opportunity tapped by banks Major foreign banks in India areABN-AMRO BankAbu Dhabi Commercial Bank Ltd.American Express Bank LtdBNP ParibasCitibankDBS Bank LtdDeutsche BankHSBC LtdStandard Chartered Bank
  • 1.4 Investment Strategies in IndiaConventionally, Indian investors were investing in the following avenues: • Fixed Deposits – They cover the fixed deposits of varied tenors offered by the commercial banks and other non-banking financial institutions. These are generally a low risk prepositions as the commercial banks are believed to return the amount due without default. By and large these FDs are the preferred choice of risk-averse Indian investors who rate safety of capital & ease of investment above all parameters. Largely, these investments earn a marginal rate of return of 6-8% per annum. • Government Bonds – The Central and State Governments raise money from the market through a variety of Small Saving Schemes like national saving certificates, Kisan Vikas Patra, Post Office Deposits, Provident Funds, etc. These schemes are risk free as the government does not default in payments. But the interest rates offered by them are in the range of 7% - 9%. • Money-back insurance - Insurance in India is mostly sold and bought as investment products. They are preferred because of their add-on benefits like financial life-cover, tax-savings and satisfactory returns. Even if one does not manage to save money and invest regularly in financial instruments, with insurance, the policyholder has no choice. If he does not pay his premiums on time, his insurance cover will lapse. Money-back Insurance schemes are used as investment avenues as they offer partial cash-back at certain intervals. This money can be utilized for children’s education, marriage, etc. • Endowment Insurance – These policies are term policies. Investors have to pay the premiums for a particular term, and at maturity the accrued bonus and other benefits are returned to the policyholder if he survives at maturity. • Bullion Market – Precious metals like gold and silver had been a safe haven for Indian investors since ages. Besides jewellery these metals are
  • used for investment purposes also. Since last 1 year, both Gold and Silver have highly appreciated in value both in the domestic as well as the international markets• Stock Market – Indian stock markets particularly the BSE and the NSE, had been a preferred destination not only for the Indian investors but also for the Foreign investors. This is evident from the fact that FIs are buying huge stakes on the Indian bourses. Although Indian Markets had been through tough times due to various scams, but history shows that they recovered very fast. Many scrip’s had been value creators for the investors. People have earned fortunes from the stock markets, but there are people who have lost everything due to incorrect timings or selection of fundamentally weak companies.• Real Estate – Approximately one fourth of all homes sold in 2006 have been purchased as an investment. Returns are almost guaranteed because property values are always on the rise due to a growing world population. Residential real estate is more than just an investment.• Mutual Funds - There is a collection of investors in Mutual funds that have professional fund managers that invest in the stock market collectively on behalf of investors. Mutual funds offer a better route to investing in equities for lay investors. A mutual fund acts like a professional fund manager, investing the money and passing the returns to its investors. All it deducts is a management fee and its expenses, which are declared in its offer document.• Unit Linked Insurance Plans - ULIPs are remarkably alike to mutual funds in terms of their structure and functioning; premium payments made are converted into units and a net asset value (NAV) is declared for the same. In traditional insurance products, the sum assured is the corner stone; in ULIPs premium payments is the key component.
  • 1.5 Introduction to Standard CharteredStandard Chartered is one of the worlds most international banks, employingalmost 60,000 people, representing over 100 nationalities, worldwide. Thisdiversity lies at the heart of the Banks values and supports the Banks growth asthe world increasingly becomes one market.Standard Chartered PLC is listed on both the London Stock Exchange and theHong Kong Stock Exchange and is consistently ranked in the top 25 amongFTSE-100 companies by market capitalization.Standard Chartered has a history of over 150 years in banking and operates inmany of the worlds fastest-growing markets with an extensive global network ofover 1,400 branches (including subsidiaries, associates and joint ventures) inover 50 countries in the Asia Pacific Region, South Asia, the Middle East, Africa,the United Kingdom and the Americas. With strong organic growth supported bystrategic alliances and acquisitions and driven by its strengths in the balance anddiversity of its business, products, geography and people, Standard Chartered iswell positioned in the emerging trade corridors of Asia, Africa and the MiddleEast. Standard Chartered derives over 90 per cent of profits from Asia, Africaand the Middle East. Serving both Consumer and Wholesale Banking customersworldwide, the Bank combines deep local knowledge with global capability tooffer a wide range of innovative products and services as well as award-winningsolutions. Trusted across its network for its standard of governance andcorporate responsibility, Standard Chartered takes a long term view of theconsequences of its actions to ensure that the Bank builds a sustainablebusiness through social inclusion, environmental protection and goodgovernance. Standard Chartered is also committed to all its stakeholders byliving its values in its approach towards managing its people, exceedingexpectations of its customers, making a difference in communities and workingwith regulators. It serves both Consumer and Wholesale Banking customers.Consumer Banking provides credit cards, personal loans, mortgages, deposittaking and wealth management services to individuals and small to mediumsized enterprises. Wholesale Banking provides corporate and institutional clients
  • with services in trade finance, cash management, lending, securities services,foreign exchange, debt capital markets and corporate finance.1.5.1 Standard Chartered Bank in IndiaStandard Chartered Bank is the largest international banking Group in India with78 branches in 30 cities. The Bank is having a combined customer base of 2.5million in retail banking and over 1200 corporate customers.The key businesses of Standard Chartered Bank in India include consumerbanking - primarily credit cards, mortgages, personal loans and wealthmanagement - and - wholesale banking, where the Bank specializes in theprovision of cash management, trade, finance, treasury and custody services.Standard Chartered was the first to issue global credit card in India, the first toissue Photo card, the first Picture Card and was the first credit card issuer to beawarded the ISO 9002 certification. Some other product innovations of StandardChartered Bank in India include the Sapnay credit card, the international debitcard that provides free access to over 1500 Visa ATMs, a first in the bankingindustry, Mileage, an overdraft facility against the security of a car and SmartCredit, a personal line of credit for salaried customer.The name is derived from Standard & Chartered. Standard Bank of British SouthAfrica merged with Chartered Bank of India, Australia and China in 1969.Chartered Bank opened its first overseas branch in India, at Kolkata, on 12 April1858. During that time Kolkata was the most important commercial city and wasthe hub of jute and indigo trades. The merger with the Standard Bank of BritishSouth Africa in 1969 and the acquisition of Grindlays Bank in 2000 were two keyevents that have played an important role in making the Bank the largestinternational bank in India.1.5.2 CSR by Standard CharteredCorporate Social Responsibility (CSR) is at the core of the values of StandardChartered Bank. The Bank is committed to the communities and environments in
  • which it operates. The Bank strongly supports the trend towards deliveringshareholder value in a socially, ethically and environmentally responsiblemanner. ‘Living with HIV’ is a global community initiative of StandardChartered that is aimed at raising awareness of HIV/AIDS amongst employeesthrough workshops and amongst stakeholders by providing thought leadership.Under ‘Seeing believes’, a programme that aims to restore sight to one millionpeople globally by 2006, the Bank has raised funds to help 8000 people to see.In partnership with Sight Savers International and VISION2020 the Bank is nowinvolved in two flagship projects at Vishakhapatnam and Muzaffarpur, both aimedat the elimination avoidable blindness. Furthermore, in support of thecommunities ravaged by the Asian Tsunami Crisis in 2004 the StandardChartered Group committed US$ 1 million to India. The Bank is utilizing thesefunds for the rehabilitation of two villages adopted near Chennai. In 2004, Standard Chartered initiated the phenomenally successful StandardChartered Mumbai Marathon - an event dedicated to charity fund raising. Thetwo marathons held so far have forged partnerships with customers and charitiesand deepened the Bank’s ties with the community, with over US$ 1 million beingraised in 2005.1.6 Products offered by Standard CharteredStandard Chartered bank provides different products and services in order tocater the needs of the customers which can be broadly classified into thefollowing categories:1.6.1 Personal BankingTo cater the diverse financial needs, Standard Chartered offers a wide range ofpremium banking products and services through its network of 81 branches in 31cities across the country. As a privileged customer of this bank, the customerscan always be assured of a banking service that is flexible enough to tailor-makea product suite to take care of his specific banking needs.
  • 1.6.2 SME BankingSME Banking provides integrated financial solutions to small and mediumbusinesses, through a relationship management approach. Its customer focusedproduct offerings include working capital finance, trade services, foreignexchange, and cash management.1.6.3 Commercial BankingStandard Chartered has maintained a long local presence, since 1858, withparticular emphasis on relationship banking. Significant networks have beenestablished with vendors and financial-related organizations to enable it to offerthe customers a comprehensive range of flexible financial services, with specialfocus on transactional banking products. Supported by state-of-the-artoperations, Standard Chartered is pro-active in improving every part of services.Electronic Delivery system has been put in place to ensure that transactions arehandled speedily. It has its Cash Product Specialists and dedicated CustomerService Centers to provide its customers with effective solutions. to fullyunderstand the workings and functions of Standard Chartered Bank, the scope ofthis project has been limited to the detailed study of only three products offeredby this bank under the above mentioned categories:Savings Account : Personal bankingUnit Linked Insurance Plan (ULIP): Personal bankingMutual Funds: Commercial banking1.7 Savings accountAn account primarily opened for and operated by individuals, wherein thenumbers of transactions are few and which give the customer liquidity, with thefacility to earn some interest on the residual balances.Standard Chartered bank offers 4 types of Savings account matching differentneeds of customers namely:1. Axcess Plus :The Standard Chartered Bank have launched the Excess Plussaving account as a premium product placed in the market with maintenance of
  • minimum quarterly balance of 10,000/- The product in supposed to be targetedto a specific group elite of customers. This will help to increase the volume andas such the profitability of the company. The name axcess plus means that theaccount is accessible anywhere anytime, as well as it will be an innovative andconvenient services for the customers needs.2. Super Value3. Parivaar account4. No frills Account5. Aasaan account6. 2-in-1 account1.71 Eligibility criteria Indian Residents NRI’s Clubs, Associations, Trusts and Registered Societies HUF (Hindu Undivided Family) Foreign Nationals (QA-22)1.7.2 Product feature in generalAccount can be in sole name or in joint namesMinimum balance: Minimum Quarterly balance of a specific amount is to bemaintained failing to which a specific fees per quarter has to be paid.Account can be operated at any branch across the country..
  • PARAMETERS charges Charges SuperValue SavingsSAVINGS ACCOUNT NAME AXcessPlus Savings Account AccountACCOUNTSCHARGES FOR OPENING THEACCOUNT NIL NILAVERAGE QUARTERLY(DAILY)BALANCE REQD. Rs.10000 Rs 50,000 Rs. 1250/qtr Rs. 1500/qtr (Bal<Rs.5000) (Rs.5000<=Bal<10k)PENALTY FOR UNSUFFICIENT Rs.750/qtr(Rs.10000>Bal>Rs.5 Rs.1250/qtr(Rs.1000AQB 000) 0>Bal>Rs.5000)DORMANT A/C CHARGES Rs.1000 per yr. Rs.1000 per yr. Rs.500 (within 6ACCOUNT CLOSURE Rs.500 (within 6 months) months)DEMAND DRAFTDRAWN AT OWN BANK(min feeRs.50 & max Rs.1500) 0.25% FREECANCELLATION Rs 250 Rs.250DRAWN AT OTHER BANK( Min FeeRs.250) 0.30% 0.25%PAY ORDER Rs.75 FREESTATEMENTSSTATEMENT OF ACCOUNT,(E-STMT) FREE/qtr FREE/qtrCHARGES FOR DUPLICATESTATEMENT Rs.100 Rs.100MONTHLY STATEMENT CHARGES Rs.100 FREEISSUE BALANCE CONFIRMATION Free for 1st YrCERTIFICATE Free for 1st Yr yr,250/yr yr,250/yrCARDSDEBIT CARD ANNUAL FEE Rs.200 per year FREEDEBIT CARD REPLACEMENT FEE Rs.200 Rs.200 Free for first 4 transactions perATM INTERCHANGE(NON month/ Rs.50 for beyond 4PARTNER) trans.SERVICESNETBANKING FREEINTERBRANCH/ INTERCITYBANKING Rs.50BILLPAY FREEPHONE BANKING FREEMOBILE BANKING(SMS) NOT AVAILABLE
  • aXcessPlus Savings SuperValue SavingsPARAMETERS Account AccountSTANDING INSTRUCTIONS Rs.100(for setting) Rs.100(for setting)SETTING UP Rs.25(on execution) Rs.25(on executionDOOR STEP BANKING FREECASH PICK UP FREECASH DELIVERY/TRANSACTION FREECHEQUE BOOKSCHEQUE BOOK CHARGES(AT PAR) FREE FREECHARGES FOR STOP PAYMENT OFINSTRUMENT Rs.100 FREECHEQUE RETURN Rs.250 + otherCHARGES(Issued) banks charges Rs.250CHEQUE RETURN Rs.100 + otherCHARGES(Deposited) banks charges FREEMISCELLANEOUSBALANCE CERTIFICATE(Upto 1 Yr)/more Than 1 Yr old FREE/Rs.250 FREE/Rs.250BANKERS REPORT Rs.50 FREESIGNATURE VERIFICATION Rs.25 FREEINSURANCE PARTNER BAJAJ ALLIANZ BAJAJ ALLIANZ Table 1.1 parameters and service charges charged by bank 1.8 ULIP (Unit Linked Insurance Plan) A Unit Link Insurance Policy (ULIP) is one in which the customer is provided with a life insurance cover and the premium paid is invested in either debt or equity products or a combination of the two. In other words, it enables the buyer to secure some protection for his family in the event of his untimely death and at the same time provides him an opportunity to earn a return on his premium paid. In
  • the event of the insured persons untimely death, his nominees would normallyreceive an amount that is the higher of the sum assured or the value of the units(investments). To put it simply, ULIP attempts to fulfill investment needs of aninvestor with protection/insurance needs of an insurance seeker. It saves theinvestor/insurance-seeker the hassles of managing and tracking a portfolio orproducts.A ULIP, as the name suggests, is a market-linked insurance plan. The maindifference between a ULIP and other insurance plans is the way in which thepremium money is invested. Premium from, say, an endowment plan, is investedprimarily in risk-free instruments like government securities (gsecs) and AAArated corporate paper, while ULIP premiums can be invested in stock markets inaddition to corporate bonds and gsecs.ULIPs offer a variety of options to the individual depending on his risk profile. Forinstance, an individual with an above-average risk appetite can choose a ULIPoption that invests upto 60% of premium in equities. Likewise, an individual witha lower risk appetite can select a ULIP that invests upto 20% of premium inequities.1.8.1 ULIP VS Traditional insurance planIt wasnt too long back, when the good old endowment plan was the preferredway to insure oneself against an eventuality and to set aside some savings tomeet ones financial objectives. Then insurance was thrown open to the privatesector. The result was the launch of a wide variety of insurance plans, includingthe ULIPs.Two factors were responsible for the advent of ULIPs on the domestic insurancehorizon. First was the arrival of private insurance companies on the domesticscene. ULIPs were one of the most significant innovations introduced by privateinsurers. The other factor that saw investors take to ULIPs was the decline ofassured return endowment plans. Of course, the regulator -- IRDA (Insuranceand Regulatory Development Authority) was instrumental in signaling the end of
  • assured return plans. Today, there is just one insurance plan from LIC (LifeInsurance Corporation) -- Komal Jeevan -- that assures return to thepolicyholder.These were the two factors most instrumental in marking the arrivalof ULIPs, but another factor that has helped their cause is a booming stockmarket. While this now appears as one of the primary reasons for theirpopularity, we believe ULIPs have some fundamental positives like enhancedflexibility and merging of investment and insurance in a single entity that havereally endeared them to individuals.1.8.2 Sum assuredPerhaps the most fundamental difference between ULIPs and traditionalendowment plans is in the concept of premium and sum assured.When you want to take a traditional endowment plan, the question your agent willask you are -- how much insurance cover do you need? Or in other words, whatis the sum assured you are looking for? The premium is calculated based on thenumber you give your agent.With a ULIP it works in reverse. When you opt for a ULIP, you will have toanswer the question -- how much premium can you pay?Depending on the premium amount you state, you are offered a sum assured asa multiple of the premium. For instance, if you are comfortable paying Rs 10,000annual premium on your ULIP, the insurance company will offer you a sumassured of say 5 to 20 times the premium amount.1.8.3 InvestmentsTraditionally, endowment plans have invested in government securities,corporate bonds and the money market. They have shirked from investing in thestock markets, although there is a provision for the same. However, for sometime now, endowment plans have discarded their traditional outlook on investingand allocate about 10%-15% of monies to stocks. This percentage varies across
  • life insurance companies. ULIPs have no such constraints on their choice ofinvestments. They invest across the board in stocks, government securities,corporate bonds and money market instruments. Of course, within a ULIP thereare options wherein equity investments are capped.1.8.4 ExpensesULIPs are considered to be very expensive when compared to traditionalendowment plans. This notion is rooted more in perception than reality. Sale of atraditional endowment plan fetches a commission of about 30% (of premium) inthe first year and 60% (of premium) over the first five years. Then there isongoing commission in the region of 5%. Sale of a ULIP fetches a relatively lowercommission ranging from as low as 5% to 30% of premium (depending on theinsurance company) in the first 1-3 years. After the initial years, it stabilizes at1-3%. Unlike endowment plans, there are no IRDA regulations on ULIPcommissions. Broadly speaking, ULIP expenses are classified into three majorcategories:1) Mortality chargesMortality expenses are charged by life insurance companies for providing a lifecover to the individual. The expenses vary with the age, sum assured and sum-at-risk for the individual. There is a direct relation between the mortality expensesand the abovementioned factors. In a ULIP, the sum-at-risk is an importantreference point for the insurance company. Put simply, the sum-at-risk is thedifference between the sum assured and the investment value the individualscorpus as on a specified date.2) Sales and administration expensesInsurance companies incur these expenses for operational purposes on a regularbasis. The expenses are recovered from the premiums that individuals paytowards their insurance policies. Agent commissions, sales and marketingexpenses and the overhead costs incurred to run the insurance business on aday-to-day basis are examples of such expenses.
  • 3) Fund management charges (FMC)These charges are levied by the insurance company to meet the expensesincurred on managing the ULIP investments. A portion of ULIP premiums areinvested in equities, bonds, G.secs and money market instruments. Managingthese investments incurs a fund management charge, similar to what mutualfunds incur on their investments. FMCs differ across investment options likeaggressive, balanced and debt ULIPs; usually a higher equity option translatesinto higher FMC. Apart from the three expense categories mentioned above,individuals may also have to incur certain expenses, which are primarily optionalin nature- the expenses will be incurred if certain choices that are made availableto individuals are exercised.a) Switching chargesIndividuals are allowed to switch their ULIP options. For example, an individualcan switch his fund money from 100% equities to a balanced portfolio, which hassay, 60% equities and 40% debt. However, the company may charge him a feefor switching. While most life insurance companies allow a certain number offree switches annually, a switch made over and above this number is charged.b) Top-up chargesULIPs allow individuals to invest a top-up amount. Top-up amount is paid inaddition to the premium amount for a particular year. Insurance companiesdeduct a certain percentage from the top-up amount as charges. These chargesare usually lower than the regular charges that are deducted from the annualpremium.c) Cancellation chargesLife insurance companies levy cancellation charges if individuals decide tosurrender their policies (usually) before three years. These charges are levied asa percentage of the fund value on a particular date.Illustration-: of different charges on ULIPtable 1.2 ULIP expense table
  • Tenure Yearly Expenses (%) Fund Effective(Yrs) premium Initial Remaining Annual Annual fund value rate of (Rs) 2 yrs tenure administration management (Rs) return (pa) (pa) expenses* charges (%) (%)** (Rs)10 358,417 6.4815 703,694 7.5320 25,000 27.00 3.00 180.00 1.00 1,232,827 7.9825 2,042,497 8.2230 3,281,631 8.36 pa: per annum * Subject to inflation @ 5% pa. ** CAGR Suppose an individual aged 30 years, wants to buy an aggressive ULIP for a sum assured of Rs500,000 for 30-Yr tenure. The premium he pays for the same is Rs25,000. The expenses for the initial 2 years is assumed to be 27% while for the remaining tenure, it is 3%. Fund management charges are assumed to be 1% p.a. of the corpus for the entire tenure. We have also assumed that the individual stays aggressive throughout the tenure and does not shift his money between the various fund options. Assuming the investments appreciate at 10% compounded annualized growth rate (CAGR). Thus fund value at the end of 10 years is Rs358,417 and the effective CAGR net of expenses is approximately 6.48%. However, it can be seen that as the years roll by, the CAGR keeps going up with a corresponding increase in the fund value. For example, the fund value at the end of the 20th year is Rs1,232,827 while the CAGR has gone up to approximately 7.98%. At the end of the 30th year, the CAGR has gone up to 8.36%. The reason why the CAGR goes up over a period of time is because the ULIP expenses even out over a period of time. The evening out occurs because although the expenses are high in the initial years, they fall thereafter. And as the years roll by, the expenses tend to spread themselves more evenly over the tenure of the ULIP. Another reason is also because the expenses are levied on
  • the annual premium amount, which stays the same throughout the tenure.Therefore, the expenses do not have any impact on the returns generated by thecorpus. Mortality expenses for ULIPs and traditional endowment plans remainthe same as also the administration charges. One area where ULIPs prove to bemore expensive than traditional endowment is in fund management. Since ULIPshave an equity component that needs to be managed actively, they incur fundmanagement charges. These charges fluctuate in the 0.80%-1.50% (of premium)range.1.8.5 FlexibilityAs we mentioned, one aspect that gives ULIPs an edge over traditionalendowment is flexibility. ULIPs offer a host of options to the individual based onhis risk profile.There are insurance companies that offer as many as five options within a ULIPwith the equity component varying from zero to a maximum of 100%. You canselect an option that best fits your objectives and risk-taking capacity.Having selected an option, you still have the flexibility to switch to another option.Most insurance companies allow a number of free switches in a year.Another innovative feature with ULIPs is the top-up facility. A top-up is a one-time additional investment in the ULIP over and above the annual premium. Thisfeature works well when you have a surplus that you are looking to invest in amarket-linked avenue, rather than stash away in a savings account or a fixeddeposit. ULIPs also have a facility that allows you to skip premiums after regularpayment in the initial years. For instance, if you have paid your premiumsreligiously over the first three years, you can skip the fourth years premium. Theinsurance company will make the necessary adjustments from your investmentsurplus to ensure the policy does not lapse. With traditional endowment, thereare no investment options. You select the only option you have and must remainwith it till maturity. There is also no concept of a top-up facility. Your premiumamount cannot be enhanced on a one-time basis and skipped premiums willresult in your policy lapsing
  • .1.8.6 TransparencyULIPs are also more transparent than traditional endowment plans. Since theyare market-linked, there is a price per unit. This is the net asset value (NAV) thatis declared on a daily basis. A simple calculation can tell you the value of yourULIP investments. Over time you know exactly how your ULIP has performed.ULIPs also disclose their portfolios regularly. This gives you an idea of how yourmoney is being managed. It also tells you whether or not your mutual fund and/orstock investments coincide with your ULIP investments. If they are, then youhave the opportunity to do a rethink on your investment strategy across the boardso as to ensure you are well diversified across investment avenues at all times.With traditional endowment, there is no concept of a NAV. However, insurers dosend you an annual statement of bonus declared during the year, which givesyou an idea of how your insurance plan is performing.Traditional endowment also does not have the practice of disclosing portfolios.But given that there are provisions that ensure a large chunk of the endowmentportfolio is in high quality (AAA/sovereign rating) debt paper, disclosure ofportfolios is likely to evoke little investor interest.1.8.7 liquidityAnother flexibility that ULIPs offer the individual is liquidity. Since ULIPinvestments are NAV-based it is possible to withdraw a portion of yourinvestments before maturity. Of course, there is an initial lock-in period (3 years)after which the withdrawal is possible.Traditional endowment has no provision for pre-mature withdrawal. You cansurrender your policy, but you wont get everything you have earned on yourpolicy in terms of premiums paid and bonuses earned. If you are clear that youwill need money at regular intervals then it is recommended that you opt formoney-back endowment.1.8.8 Tax benefits
  • Taxation is one area where there is common ground between ULIPs andtraditional endowment. Premiums in ULIPs as well as traditional endowmentplans are eligible for tax benefits under Section 80C subject to a maximum limitof Rs 100,000. On the same lines, monies received on maturity on ULIPs andtraditional endowment are tax-free under Section 10.1.8.9 ULIP - Key features in general1. Premiums paid can be single, regular or variable. The payment period too canbe regular or variable. The risk cover can be increased or decreased.2. As in all insurance policies, the risk charge (mortality rate) varies with age.3. The maturity benefit is not typically a fixed amount and the maturity period canbe advanced or extended.4. Investments can be made in gilt funds, balanced funds, money market funds,growth funds or bonds.5. The policyholder can switch between schemes, for instance, balanced to debtor gilt to equity, etc.6. The maturity benefit is the net asset value of the units.7. The costs in ULIP are higher because there is a life insurance component in itas well, in addition to the investment component.8. Insurance companies have the discretion to decide on their investmentportfolios.9. They are simple, clear, and easy to understand.10. Being transparent the policyholder gets the entire episode on theperformance of his fund.11. Lead to an efficient utilization of capital.12. ULIP products are exempted from tax and they provide life insurance.13. Provides capital appreciation.14. Investor gets an option to choose among debt, balanced and equity funds.1.8.10 ULIP – Standard CharteredThe flexible Unit linked life insurance plans at Standard Chartered bank providesthe opportunity to participate in market-linked returns while enjoying the valuable
  • benefits of life insurance. Insurance Plans for Standard Chartered Bankcustomers is issued by Bajaj Allianz Life Insurance Company Limited.1.8.11 BAJAJ ALLIANZ- BackgroundBajaj Allianz Life Insurance Co Ltd is a joint venture between two leadingconglomerates- Allianz AG, one of the worlds largest insurance companies, andBajaj Auto, one of the biggest two and three wheeler manufacturers in the world.Allianz Group is one of the worlds leading insurers and financial serviceproviders. Founded in 1890 in Berlin, Allianz is now present in over 70 countrieswith almost 174,000 employees. Allianz Group provides its more than 60 millioncustomers worldwide with a comprehensive range of services in the areas ofProperty and Casualty Insurance, Life and Health Insurance, & AssetManagement and Banking.Bajaj Auto Ltd, the flagship company of the Rs80bn Bajaj Group is the largestmanufacturer of two-wheelers and three-wheelers in India and one of the largestin the world. Bajaj Auto has a strong brand image & brand loyalty synonymouswith quality & customer focus in IndiaAllianz AG with over 110 years of experience in over 70 countries and Bajaj Auto,trusted for over 55 years in the Indian market, together are committed to offerInsurance solutions that provide all the security needed for a family.1.8.12 Capital unit gain a unit liked planCapital Unit Gain is a unit linked endowment regular premium plan with thebenefit of life protection offered by Bajaj Allianz. By choosing an appropriatepremium level and term, individual can match the maturity date of the plan to aspecific savings need such as child’s education, wedding, retirement etc. It hasunmatched flexibility to meet any emergency or any financial need. Bajaj AllianzCapital Unit Gain gives up to 97% allocation from the first year onwards toensure that your investment income gets accelerated from the first year itself.With Bajaj Allianz Capital Unit Gain one can get to choose from a wide range of
  • high quality investment funds coupled with flexible investment management. Thisis the one-stop solution to investment, tax-saving and protection needs.The Key Features of the Capital Unit Gain Plan are:• Option of choosing any sum assured between minimum and maximum limits tomatch insurance needs.• Option of choosing from a host of additional rider benefits: UL Accidental DeathBenefit, UL Accidental Permanent Total/Partial Disability Benefit, UL CriticalIllnessBenefit and UL Hospital Cash Benefit• Increase savings by paying top up premiums.• Same premium allocation for all policy years with higher allocation for top uppremiums.• Individuals choice of adopting own investment strategy to grow the funds underthe policy .• Choice of 5 investment funds with flexible investment management, with theoption of changing funds at any time and also invest in the newer funds thatwould be introduced from time to time.• Partial withdrawals without any surrender charge .• Flexibility to increase / decrease the regular premiums1.8.13 COMPARISON OF BAJAJ ALLIANZ ULIP vis-à-vis OTHER POPULARULIPS AVAILABLE IN INDIA1.3 comparison table of ULIPFeatures Bajaj Allianz ICICI ABN AmroPolicy Name Capital Unit Gain Life time Plus Life Bond
  • Age 0 Yrs (RiskMinimum age at commences at age 7)entry 0 1Maximum age atentry 60 Yrs 65 65Risk covered forage between 7-70 years 0-75 7-70 yearsPremium Amount(minimum)Annual Rs.10000 20000 NAHalf-Yearly Available NAQuarterly Available NA Rs.1000 (Rs.5000 forMonthly top up) NASingle premium Availablepayment option Available Available Min.25000 Y times the annual 1.25 times theMaximum prem. depending on Annual Premium* SingleAssured Amount age (Term/2) Premium Age Y 0-30 100 31-35 85 36-40 70 41-45 50 46-55 30 56-60 20 0.5 times the PolicyMinimum Assured Term times Annualized Annual Premium*Amount Premium. (Term/2) As above annual premiumRegular Premium Allocation charge in Allocation rate Allocationallocation % rate
  • <Rs. 35000 95% 73% 97%Rs.35000-Rs.99999 95% 73% 99%Rs. 100000-Rs.149999 95% 99% 101%Rs.150000- 95%(Uptil Rs.199999),Rs.2499999 96% 99% 102%Rs.2500000-Rs.9999999 96% 103%Rs.10000000-Rs.4999999 97% 104%Rs.5000000&above 97% 104.5%Benefits offered Sum assured or fund value Sum Assured or (which ever isDeath Benefit Fund Value higher)Before Age of 7yrs Fund value Sum assured less partial withdrawals/Between age of 7 fund value on as onyrs & 60 yrs date of intimation Sum assured less partial withdrawals/ fund value on as onOn & after 60 yrs date of intimationMaturity Benefit Fund value Fund Value Fund value
  • Minimum partialwithdrawal amount Rs.5000 Rs.2,000 Rs.5000(at bid price)Investment Liquid Fund- RiskOptions profile –Low Flexi Growth II Protector Bond Fund- Risk profile- Moderate Maxi miser II Growth Equity Growth Fund- Risk Profile- Very High Flexi Balanced II Balanced Equity Index Fund II- Risk profile- High Balancer II Accelerator Mid-Cap Fund – Risk profile- Very High Protector II PreserverMinimum Balanceacross all funds Rs.10000 Rs.10000 Rs.10000Tax Benefits Save up to Rs.33660 Save up to Save up toSec 80(c) each Rs.33660 each Rs.33660 each year as prem. year as prem. Up to year as prem. Up to Up to Rs.100000 Rs.100000 Rs.100000 are allowed as a are allowed as a are allowed as deduction deduction a deduction Benefits are tax Benefits areSec 10(10(d)) Benefits are tax free free tax freeChargesAnnual Mortality Depending on your Depending sumcharges age Assured Sum at Risk charged every month
  • Annual 15% of singleAdministration premium forcharges Rs.600p.a. per policy Rs.60 per month first 5 years &1% thereafter 2.75%p.a.of the NAVAnnual Fund for Equity growth fundManagement & Accelerator Midcap 1.5%p.a. Flexi 1%p.a. Profitcharges Fund Growth II Funds 2.25%p.a.for Equity 1.5%p.a. Maxi 1%p.a. Index Fund II miser II Protector 1.75%p.a.for Liquid 1.0%p.a. Flexi 1.25%p.a. Fund Bond Fund Balanced II Balancer 1.0%p.a. Balancer 1.5%p.a. II Growth . 0 .75%p.a.Protecto r II 0.75%p.a. PreserverNo. of free switchesannually 3 4 2 0.5% subject to max. ofCharges for Rs.100 of switch Rs.500 peradditional switches Rs.200/ 5% of switch amount switch amount (which ever is lower)Minimum Switchamount Rs.5000 or Fund value 2000 Rs.10000 (lower)Minimum Top-uppremium Rs.1000 NA Rs.6250 Depending upon theTop up allocation 100% NA amount
  • FlexibilityTo increase every 3rd yearpremium every 3rd year up to not available up to 5 times of revised 3 times. regular prem. / Quantum of half of the term times revised regular Increase would premium be 25%of sum (which ever is higher) assured/ Rs. 100000. (lower)to pay top uppremiums Level of top up prem. not applicable Between 1.25 times to 5 times ProportionateTo decrease decrease of sumpremium assured Available Available (reduced regular prem. Not to be less than regular prem.) Any amount, available but only on Policy anniversaries available 20% of chosen premium
  • 100 % penalty on partial or full 4% and 2% of withdrawal before value ofCancellation or completion of firt three accumulationsurrender years units. Of singleCharges premium1.9 Concept of mutual fundA Mutual Fund is a body corporate that pools the savings of a number ofinvestors and invests the same in a variety of different financial instruments, orsecurities. The income earned through these investments and the capitalappreciation realized by the scheme is shared by its unit holders in proportion tothe number of units owned by them. Mutual funds can thus be considered asfinancial intermediaries in the investment business that collect funds from thepublic and invest on behalf of the investors. The losses and gains accrue to theinvestors only. The Investment objectives outlined by a Mutual Fund in itsprospectus are binding on the Mutual Fund scheme. The investment objectivesspecify the class of securities a Mutual Fund can invest in. Mutual Funds investin various asset classes like equity, bonds, debentures, commercial paper andgovernment securities
  • 1.9.1 Structure of mutual fundThe structure of a mutual fund differs from country to country. In India thestructure of mutual fund is determined by SEBI regulations. These regulationsare required to be established in the form of a trust under the Indian trust act;1882.in India. The mutual fund industry has a four tier structure. The four partiesthat are required to be involved are;These four entities operate in the following manner SPONSOR BOARD OF TRISTEES/DIRECTORS OF TRUSTEES COMPANY ASSET MANAGEMENT COMPANY CUSTODIAN Fig 1.2 Mutual Fund Operation Flow Chart1.9.2 Working of mutual fund and their performanceMutual funds invest their funds in capital market instruments such as shares,debentures, bonds and money market instruments and therefore the net assetvalue of such investments will reflect the market values of underlying assets.These market values fluctuate and therefore the net asset values of the mutualfund schemes also fluctuate.All the capital market instruments have varying degrees of risk, the degree of riskbeing the highest in equities and the risk factor is highlighted in the respectiveoffer documents as well as in the abridged offer documents. The investortherefore is in the full knowledge and understanding of the risks involved invarious schemes. As per SEBI regulation all mutual funds disclose their portfolio
  • periodically and all open-ended funds offer exit option to investors at NAV basedprice.In the current year, the share market is passing through a bear phase with pricesfalling across the board and steeply in the technology scrips. Reflecting this fall inshare prices, the NAVs of most of the equity schemes in general and of thetechnology funds in particular have also fallen. This fall in the NAVs shouldtherefore be viewed in the context of the fall in the share prices, a phenomenawhich is world wide today. The fall in NAVs not only affects the investors but ithas an impact on the fees and earnings of the investment managers also.It may be recalled that the mutual funds have given good returns while themarket was in the upswing and even today, the non-equity schemes whichaccount for about 60 percent of total assets under management providecompetitive rates of returns.1.9.3 Mutual funds work under strict regulatory frame workThe Association of Mutual Funds In India (AMFI) reassures the investors in unitsof mutual funds that the mutual funds function within the strict regulatoryframework.The different entities such as the Mutual Fund, the Asset Management Companyand the Custodian operate as per the provisions of the SEBI Mutual FundRegulation 1996 and the rules and guidelines issued by SEBI. Each of theseentities has independent Boards of Directors and separate auditors. SEBI keepsa close watch on the mutual funds through periodical reports and every threemonths, each mutual fund submits to SEBI a report conforming compliance withregulatory provisions and mutual funds are required to record their investmentdecisions. Any deficiency or non-compliance is dealt with suitably by SEBI.Every year, each mutual fund is inspected by SEBI and such inspection is both a
  • detailed scrutiny of operations and a rectification exercise. Thus, the mutualfunds are strictly supervised and regulated entities and the regulatory provisionsmatch with international standards. AMFI also is engaged in upgradingprofessional standards and in promoting best industry practices in diverse areassuch as valuation, disclosure, transparency etc1.9.4 Types of mutual fundsMutual funds differ from each other on the basis of various factors like theirstructure, their investment objective, and the type of investors, management styleand load. The various classes of funds are:TYPES OF MUTUAL FUND SCHEMES BY STRUCTUREOpen – Ended Schemes.Close – Ended Schemes.Interval Schemes.BY INVESTMENT OBJECTIVEGrowth Schemes.Income Schemes.Balanced Schemes.OTHER SCHEMESTax Saving Schemes.Special Schemes.Index Schemes. Sector Specific Schemes1.9.4.1 Open – ended schemesThe units offered by these schemes are available for sale and repurchase on anybusiness day at NAV based prices. Hence, the unit capital of the schemes keeps
  • changing each day. Such schemes thus offer very high liquidity to investors andare becoming increasingly popular in India. Please note that an open-ended fundis NOT obliged to keep selling/issuing new units at all times, and may stopissuing further subscription to new investors. On the other hand, an open-endedfund rarely denies to its investor the facility to redeem existing units.1.9.4.2 Closed – ended schemesThe unit capital of a close-ended product is fixed as it makes a one-time sale offixed number of units. These schemes are launched with an initial public offer(IPO) with a stated maturity period after which the units are fully redeemed atNAV linked prices. In the interim, investors can buy or sell units on the stockexchanges where they are listed. Unlike open-ended schemes, the unit capital inclosed-ended schemes usually remains unchanged. After an initial closed period,the scheme may offer direct repurchase facility to the investors. Closed-endedschemes are usually more illiquid as compared to open-ended schemes andhence trade at a discount to the NAV. This discount tends towards the NAVcloser to the maturity date of the scheme.1.9.4.3. Interval schemesThese schemes combine the features of open-ended and closed-endedschemes. They may be traded on the stock exchange or may be open for sale orredemption during pre-determined intervals at NAV based prices.1.9.4.4 Growth schemesThese schemes, also commonly called Equity Schemes, seek to invest a majorityof their funds in equities and a small portion in money market instruments. Suchschemes have the potential to deliver superior returns over the long term.However, because they invest in equities, these schemes are exposed tofluctuations in value especially in the short term.
  • 1.9.4.5 Income schemesThese schemes, also commonly called Debt Schemes, invest in debt securitiessuch as corporate bonds, debentures and government securities. The prices ofthese schemes tend to be more stable compared with equity schemes and mostof the returns to the investors are generated through dividends or steady capitalappreciation. These schemes are ideal for conservative investors or those not ina position to take higher equity risks, such as retired individuals. However, ascompared to the money market schemes they do have a higher price fluctuationrisk and compared to a Gilt fund they have a higher credit risk.1.9.4.6 Balanced schemesThese schemes are commonly known as Hybrid schemes. These schemesinvest in both equities as well as debt. By investing in a mix of this nature,balanced schemes seek to attain the objective of income and moderate capitalappreciation and are ideal for investors with a conservative, long-termorientation.1.9.4.7 Tax saving schemesInvestors are being encouraged to invest in equity markets through Equity LinkedSavings Scheme (“ELSS”) by offering them a tax rebate. Units purchased cannotbe assigned / transferred/ pledged / redeemed / switched – out until completionof 3 years from the date of allotment of the respective Units.The Scheme is subject to Securities & Exchange Board of India (Mutual Funds)Regulations, 1996 and the notifications issued by the Ministry of Finance(Department of Economic Affairs), Government of India regarding ELSS.Subject to such conditions and limitations, as prescribed under Section 88 of theIncome-tax Act, 1961.1.9.4.8 Index Schemes
  • The primary purpose of an Index is to serve as a measure of the performance ofthe market as a whole, or a specific sector of the market. An Index also serves asa relevant benchmark to evaluate the performance of mutual funds. Someinvestors are interested in investing in the market in general rather than investingin any specific fund. Such investors are happy to receive the returns posted bythe markets. As it is not practical to invest in each and every stock in the marketin proportion to its size, these investors are comfortable investing in a fund thatthey believe is a good representative of the entire market. Index Funds arelaunched and managed for such investors.1.9.4.9 Sector specific schemesSector Specific Schemes generally invests money in some specified sectors forexample: “Real Estate” Specialized real estate funds would invest in real estatesdirectly, or may fund real estate developers or lend to them directly or buy sharesof housing finance companies or may even buy their securitized assets.1.9.5 Tax benefit in mutual fundThe taxman has, over’s the years , been more or less kind to mutual fund .withlaws varying from time to time , the overall objective has been encourage thegrowth of the mutual fund Industry . Currently, a variety of tax laws applies tomutual funds, which are broadly listed below:-1.9.6 Capital gainUnits of mutual fund schemes held for a period for more than twelve months aretreated as long term capital assets. In such cases, the unit holder has the optionto pay capital gain tax either 20% with indexation or 10% without indexation.1.9.7 Tax deducted at source
  • For any income credited or paid by a fund, no tax is deducted withheld at source.The relevant sections in the income tax act governing this provision are section194k 196A.1.9.8 Wealth taxMutual fund units are not currently treated as assets under section 2 of thewealth tax act and are therefore not liable to tax.1.9.9 Income from unitsAny income received from units of the schemes of a mutual fund specified undersection 23(D) is exempt under section 10(33)of the act . While section 10 (23D)exempt income of specified mutual funds from tax (which currently includes allmutual funds operating in India), section 10(33) exempt income from funds in thehands of the unit holders. However, this does not mean that there is no tax at allon income distribution by mutual funds.1.9.10 Income distribution taxAs per prevailing tax loss , income distributed by scheme other than open endequity scheme is subject to tax at 20% (plus surcharge of 10%) . for thispurpose , equity schemes have been defined to be those schemes that havemore than 50% of their assets in the form of equity. Open end equity schemeshave been left out of the purview of this distribution tax for a period of three yearsbeginning from April 1999.1.9.11 Section 88The investment in mutual funds designated as equity linked saving scheme(ELSS) qualifies for rebate under section 88. The maximum amount that can beinvested in these schemes is Rs10000, therefore the maximum tax benefitavailable works out to Rs2000. Apart from ELSS schemes, the benefit of section88 is also available in selected scheme in some funds such as UTI ULIP, KPpension plan etc.1.9.12 Income received from mutual funds
  • The finance bill 1999 made income (i.e. dividends) received from all mutual fundstax free in the hands of investors. Investors need not pay any tax on dividendsreceived from a mutual fund for a period of three years effective from April 1,1999. For the investors it does not matter what kinds of mutual fund schemesthey have invested in. Dividend whether received from equity, equity and debtor a debt scheme will all be tax free for the investors.While dividend in the hands of the investor are free from tax, mutual funds arenow required to pay a “distribution tax” of 20% from the financial year 2000-2001(instead of 10% as distribution tax last year ). The distribution tax is nit to be paidon all types of mutual fund schemes. Effective April 1, 1999, for a period of threeyears, open-end equity oriented schemes will be exempt from paying thedistribution tax.1.9.13 Tax implication for income received on open end equity orientedschemesAs per the finance bill 1999, income distributed under the US-64 scheme andother open ended equity oriented scheme of UTI and mutual funds are exemptfrom the levy of this tax for a period of three financial years starting from1.4.1999. An open ended equity oriented scheme is defined as one where morethan 50% of the schemes investible funds are invested in domestic equities. The50% is computed taking the opening and closing percentage of particularsmonth’s equity holdings, in turn, calculate the monthly average.1.9.14 Long term capital gains arising from sale of mutual fund unitsAs per the current provision of the budget, long term capital gains arising fromthe sale of listed securities and shares as define under the securitiescontracts(regulations)act , 1956 (SCRA)are now chargeable to tax at a maximumrate of 10%. As per the earlier income tax law, units of mutual funds did notqualify as listed securities under the SCRA, but as per the provision of unionbudget 2000-2001 units of all mutual funds will be considered as listed securitiesand long term capital gains from units of mutual funds will be taxed at 20% after
  • giving benefit of past inflation indexation, or a flat rate of 10% whichever is lower.That is, persons would have the option of either availing of cost indexation on thecapital gains and paying 20% capital gains tax or paying a flat rate of 10%without cast indexation. As a result, the maximum capital gains tax payable hasbeen capped at 10%.1.9.15 Advantage of investing in mutual fundThe advantages of investing in a Mutual Fund are: • Professional Management. The major advantage of investing in a mutual fund is that you get a professional money manager to manage your investments for a small fee. You can leave the investment decisions to him and only have to monitor the performance of the fund at regular intervals. • Diversification. Considered the essential tool in risk management, mutual funds make it possible for even small investors to diversify their portfolio. A mutual fund can effectively diversify its portfolio because of the large corpus. However, a small investor cannot have a well-diversified portfolio because it calls for large investment. For example, a modest portfolio of 10 bluechip stocks calls for a few a few thousands. • Convenient Administration. Mutual funds offer tailor-made solutions like systematic investment plans and systematic withdrawal plans to investors, which is very convenient to investors. Investors also do not have to worry about investment decisions, they do not have to deal with brokerage or depository, etc. for buying or selling of securities. Mutual funds also offer specialized schemes like retirement plans, children’s plans, industry specific schemes, etc. to suit
  • personal preference of investors. These schemes also help small investorswith asset allocation of their corpus. It also saves a lot of paper work.• Costs EffectivenessA small investor will find that the mutual fund route is a cost-effective method(the AMC fee is normally 2.5%) and it also saves a lot of transaction cost asmutual funds get concession from brokerages. Also, the investor gets theservice of a financial professional for a very small fee. If he were to seek afinancial advisors help directly, he will end up paying significantly more forinvestment advice. Also, he will need to have a sizeable corpus to offer forinvestment management to be eligible for an investment adviser’s services.• Liquidity.You can liquidate your investments within 3 to 5 working days (mutual fundsdispatch redemption cheques speedily and also offer direct credit facility intoyour bank account i.e. Electronic Clearing Services).• Transparency.Mutual funds offer daily NAVs of schemes, which help you to monitor yourinvestments on a regular basis. They also send quarterly newsletters, whichgive details of the portfolio, performance of schemes against variousbenchmarks, etc. They are also well regulated and SEBI monitors theiractions closely.• Tax benefits.You do not have to pay any taxes on dividends issued by mutual funds. Youalso have the advantage of capital gains taxation. Tax-saving schemes andpension schemes give you the added advantage of benefits under section88.• AffordabilityMutual funds allow you to invest small sums. For instance, if you want to buya portfolio of blue chips of modest size, you should at least have a few lakhsof rupees. A mutual fund gives you the same portfolio for meager investment
  • of Rs.1,000-5,000. A mutual fund can do that because it collects money from many people and it has a large corpus.1.9.16 Disadvantage of investing in mutual fund • No choice to the investors The investor can not choose the security they want to invest in, or the security they want to sell. They are dependant on the fund manager for this purpose. He decides where the investment should be made. • Wrong call of the fund manager The investor faces the risk of the fund manager not performing well. Also if the fund manager’s compensation is linked to the funds’ performance, he may be tempted to show good result in the short – term without paying attention to the expected long term performance of the fund. This would harm the long term interest of the investors. • Expense ratio Management fees charged by the fund reduce the return available to the investors. Though the maximum limit of the expense ratio is 2.5%. The higher the expense of the fund reduce the return is given to the investor. • No discretion in withdrawal While investor in securities can decide the amount of earning they want to withdraw a particular period , investor in mutual fund have no such discretion as the amount of earning that are to be paid out to the investors in a particular year is decided by the mutual fund . • Uncertainty Today’s environment is characterized by a deep industrial recession and consequent high level of default on loans provided by banking sector to industry. In such a scenario, it may be prudent to look at the credit quality aspect very carefully before investing in an income mutual fund.
  • Chapter- 2 Introduction to study2.1 Need of studyFifteen years ago, a customer would have been content with just a fixed depositor a recurring deposit in addition to his savings account. Today, he wants tospread his wealth around. He wants to park his savings in equities, fixed de-posits, mutual funds, pension products and insurance. The bank has a choice -either offer the customer all these products or lose him. While there has been alot of debate on which is a more successful model - niche banking or universalbanking - in India, at least for now, it is quite clear that it is the latter and bankswill necessarily have to offer every imaginable financial product to the customerto avoid losing him to competition. The desire, or rather, the compulsion to be aone-stop shop for the customers investment and borrowing needs, has givenbirth to what is being termed ‘the financial conglomerate - a model that we areg6ing to see an increasing number of banks adopt. Banking, until a few yearsago, was what I would call a desk job. You sat at your desk everyday, accepteddeposits, assessed loan applications and disbursed funds. The customer cameto you and you dictated terms to him. If your terms were not acceptable to himand he went away, it never bothered you. The next person was already at thedoor before the disappointed customer even left. Banking was a sellers market.That is all now a thing of the past. The customer now decides which bank hewants to deal with. He shops around to get the best price and if your prices arenot competitive enough or acceptable to him, he simply goes to another bank.Bankers today need to be out there in the field, talking to the customer, findingout and understanding his needs and, more importantly, making sure that theyare able to offer him a better deal than the competition. But while the corporate
  • customer is already changing the terms on which banks deal with him, I believethat it is going to be the retail customer that is going to change the very face ofbanks in India in the years to come. No one, not even the most far-sighted ofbankers, could have ever foreseen what banking might have looked like at theturn of the 21 st century. Retail banking had a good buzz about it, there wasmoney to be made from it but no one ever imagined that this business woulddrive the growth of the banking industry on a scale that we are now beginning tosee. The Indian financial system is typified by low financial product penetration.The domestic loan to Gross Domestic Product (GDP) ratio in India is at only62.4% compared to China which is 166.3% and even Malaysia which is 104.5%.Consumer credit in India is still only 7% of GDP compared to Indonesia which is22% or the US where it is as high as 70%. Only 8% of the population in India iscurrently insured compared to 32% in Malaysia. Only one in every 23 of Indiasbank account holders owns a credit card compared to Thailand where one inevery four Thais own a credit card. Life insurance premiums account for just 2%of GDP and the mutual funds industry makes up under 2% of household savings.India lags behind most other emerging markets in retail lending. For instance,home loans as a percentage of GDP is at less then 3%. Compare this to.Malaysia, where it is at 23% and Australia at 44% and you get a clear sense ofthe potential that India, with its burgeoning middle class, has.The Indian customer of today has become more demanding as a result of whichmost banks in India now offer a full gamut of products to their retail clients. Inaddition to the plain vanilla deposits, banks are striving to get a larger share oftheir customers wallets by undertaking mutual funds and insurance sales.After seeing the immense competition and changing investment behaviorStandard Chartered Bank, personal decided that there is a need to understandthe investment behavior of investors as a result a market research was decidedto understand the need of the investors.
  • 2.2 Scope of the studyThe project will give an idea to standard chartered bank personnel an idea aboutthe investment behavior of the investors. It will guide them in creating strategiesfor sales force to target their potential customers. Questionnaire developed forthe survey will help standard chartered bank to identify its potential customers forits products like ULIP and mutual fund. The study will also guide them to identifythe need of the up coming generation and their investment styles which will helpin development of the product for this generation.2.3 Objective of studyThe main objective of the research is the comprehensive study of bankingproducts like saving accounts, ULIP, mutual fund. Different service chargescharged by banks on these products by banks and understanding the product. Acomparative study of various charges charged by Bajaj Allianz , ABN amro bankand ICICI . And the survey was carried to study the investment behavior ofinvestors. And to find out the potential customers for products of standardchartered bank like ULIP and mutual fund2.3.1 Objective of the surveyTo know the existing investment pattern among different age groups and differentincome group.To know the present portfolio of the investors, their perceptions about differentinvestment schemes, their investment concerns, their present returns, and theirfuture expectations from different investment schemes..To know the potential customers for the investment schemes: ULIP and MutualFunds of Standard Chartered bank.
  • Chapter- 3 Research MethodologyTypes of Research: descriptive studySampling: Convenient samplingTypes of DataCollected: Primary Data – Through Questionnaire Secondary Data – through extensive search Websites and study materialTime Dimensions : The Time Dimensions of the study was approximately eight weeks as it was provided by the instituteThe survey process involved two phases: First phase included identification andselection of the target audience to be studied and to determine the parameterson which respondents will justify their preferences. The audience were targetedand analyzed basically on the basis of two important parameters: Age, andIncome. Demographical information was also taken in order to know theinvestment patterns according to the location, age etc. A questionnaire wasdesigned to collect the needed information from the respondents. (See theannexure)In the second phase data was collected through questionnaire from more than100 respondents within DELHI. Results were viewed cautiously as sample wasfrom a specific population. The responses that were generated during thisexercise were converted in the form of percentages to have a comparativeoutlook, as the numbers itself cannot explain the true picture. These percentages
  • were then represented through the simple tools like bar graphs, pie charts usingSPSS software. Chapter- 4 Review of the Relevant LiteratureThere used to be a time, not so long ago, when young boys doffed their caps astheir headmaster passed by; when the bank manager was held in such highregard that it was inconceivable to question his authority; and when politicianswere revered as the custodians of a civilised society. And there also used to bethat enviable epoch when the consumer believed all he or she saw on televisionand a comprehensive ad campaign could change the habits of a generation.How adland must be missing these times as time moves on and behaviourchanges. However, the consumer no longer feels the need to reference itsbehaviour against a small band of individuals and has slowly changed the shapeof the ‘authoritative’ pyramid it so longingly coveted. There is an ever increasingchasm of trust between the historical mandarins and today’s consumer. Todaythe trust in the aforementioned has wavered considerably and in many casesvanished altogether. And every brand now needs to consider what the trustdeficit means to it. For instance, a recent study undertaken by YouGov on behalfof Team spirit found that only half of consumers claimed to trust banks andbuilding societies and that just 5% trust investment companies and 8% insurancecompaniesBy Joanne Parker, Managing Director of Team spirit, economics times, 10 july 2004.There is no denying the fact that the financial services industry has gone throughthe most change since the process of liberalization began a little over a decadeago. And while indeed Regulation has played a key role in the transformation ofIndian banks, I would include three other broad factors that have been
  • responsible for this change. These are Technology, the Customer andConsolidation. The demographics of our country will also be a key driver increating a large retail customer base that banks just cannot afford to ignore with54% of the Indian population under 25 years of age. As this population enters thewage earner category by the year 2011, the propensity to use multiple financialproducts will be high. Over 60% of this age group will be under 40 years of ageand a prime customer segment for insurance, mutual funds, credit cards etc.Already, many banks enjoy a higher cross-sell ratio with customers in the 25-35age group than they do with older customers. CHANGING FACE OF INDIAN BANKING by NAINA LAL KIDWAL 31 st March 2005 ,Coming to banking again, Banks are offering facilities to suit every pocket andevery segment of the Society. Human capital of the banks is facilitated to finetune their skills and attitudes to handle any type of complex and challengingenvironment to ensure the needs of the society are met. So to say, the bank staffare fully equipped and empowered to handle the job. The core function of HRD inthe banking industry is to facilitate performance improvement, measured not onlyin terms of financial indicators of operational efficiency but also in terms of thequality of financial services provided. Factors like skills, attitudes and knowledgeof the human capital play a crucial role in determining the competitiveness of thefinancial sector. The quality of human resources indicates the ability of banks todeliver value to customersAddress by Shri Vepa Kamesam, Chairman, Governing Council, IDRBT, Hyderabad and formerDeputy Governor, Reserve Bank of India at the Meet of General Managers in charge of HRD &Training at JNIBD, Hyderabad on February 7, 2004.
  • Chapter- 5 Analysis and FindingAs a part of our project, in order to know the behavior of the investors about theinvestment schemes basically ULIP and MUTUAL FUNDS, a survey was beingconducted by us in Delhi region.5.2Age distribution in sample Table 5.1 Age distribution Cumulative Frequency Percent Valid Percent PercentValid 18-25 23 23.0 23.0 23.0 26-35 29 29.0 29.0 52.0 36-50 25 25.0 25.0 77.0 >50 23 23.0 23.0 100.0 Total 100 100.0 100.0
  • age 18-25 26-35 36-50 >50Fig 5.1 Age group pie chartFor the study proper attention was paid on the selection of respondent . a properproportion of different age group were taken for study .23%of the respondent arefrom age group of 18 – 25, 29% from 26 -35, 25% from age group 36 -50. and23% above the age group of 50 years.
  • 5.3 Type of investor as per age Bar Chart typeofinvestor 15 conservative moderate aggressive 12 9 C n u o t 6 3 0 18-25 26-35 36-50 >50 ageFig 5.2 Type of investor according to ageThe age brackets taken for the analysis are as follows:18-2526-3536-5050 AboveOn doing the survey it was found that mostly people in every age group are safeinvestors. They do not prefer taking any risk while investing and like to maintainthe risk free portfolio. Survey shows that in age group 18- 25 and 26 – 35 thereare 60.9% and 51.7% are very aggressive style of investment. as this age groupis young and in this growing economy of India their savings have increased sothis pattern can be seen. As the age of person increases he tries to save guardhis hard earned money this behaviour can be seen in age group above 50 herethe conservative style is seen in 56.5% of the people.
  • 5.4 Investment made in product as per age group Bar Chart investmentmade 14 ulip mf 12 fd ulip+mf fd+insr 10 8 C n u o t 6 4 2 0 18-25 26-35 36-50 >50 ageFig 5.3 Investment made as per ageAnalysisSample taken for study shows different investment strategies indifferent agegroup. In age group 18 -25 and in 26 -35 there are large number of investor whohave invested in mutual fund and ULIP. In age group 18 – 25, 39.1% and 56.5%investment are made in ULIP and mutual fund respectively. In age group 26 – 35,48.3% and 34.5% people have invested in ULIP and in mutual fund respectively.In age group 36 -50 we see a mixed behavior this age group is moderate in itsinvestment style. People above 50 have parked their funds usually in fixeddeposit schemes or in insurance.
  • 5.5 Investment made as per income Bar Chart investmentmade 20 ulip mf fd ulip+mf fd+insr 15 10 C n u o t 5 0 <15000 15000 - 30000 30000 -50000 >50000 incomeFig 5.4 Investment made as per incomeAnalysisStudying the survey data revels that according to income the investmentstrategies opted by people differ according to income level. Income group Rs15000- 30000 monthly have made their maximum investment in ULIP and mutualfund. Almost 48.4% have invested in ULIP and 28.6% in mutual fund. in Incomegroup Rs30000 – 50000, 68.8% of respondent have invested their money in ulipand mutual funds. In income group above Rs50000 there most of the investorhave made investment in fixed deposit and insurance.
  • 5.6 Influence on investment decisions influnce agents, brokers peers self analysisFig 5.5 Influence pie chart Table 5.2 Influence frequency chart Cumulative Frequency Percent Valid Percent PercentValid agents, 40 40.0 40.0 40.0 brokers peers 37 37.0 37.0 77.0 self 23 23.0 23.0 100.0 analysis Total 100 100.0 100.0Survey shows that 40% of people are influenced by their agents or broker. Thisbehaviour revels that sales force of banks is the major factor to turn theinvestment need of people into final investment of their investment option.Second influencing factor that is the effect of peers is seen to be 37% amongrespondents, thus we can say that a large portion of population are influenced bytheir peers and their experiences.
  • 5.7 Reasons for investment factors increase in wealth monthly income genereted safety of principalFig 5.6 Factors affecting investment decision Table 5.3 Factors affecting investment decisions Cumulative Frequency Percent Valid Percent PercentValid increase in 46 46.0 46.0 46.0 wealth monthly income 24 24.0 24.0 70.0 generated safety of 30 30.0 30.0 100.0 principal Total 100 100.0 100.0After going through the survey data we come to know that a major portion ofpopulation makes investment in different investment option to increase theirwealth and this group is 46% in size of total population. 30% of the respondentare concerned about the safety of their principal amount invested. In other wordsthey are moderate risk taker and want security of their funds first. 24% of thepeople make investment to get good monthly return.
  • 5.8 Reinvestment decision as per age Bar Chart reinvestment 20 if services are good if returns are better services+returns 15 are good 10 C n u o t 5 0 18-25 26-35 36-50 >50 ageFig 5.7 Reinvestment as per age Bar Chart reinvestment 30 if services are good if returns are 25 better services+returns are good 20 15 C o n u t 10 5 0 <15000 15000 - 30000 30000 -50000 >50000 incomeFig 5.8 Reinvestment as per income
  • On going through the age and reinvestment graph and income and reinvestmentgraph we can see that in every age group and in every income group peoplereinvest in the same company’s product if the services provided by the companyare good and the investor gets a good return in comparison to the other serviceproviders. 55% of the respondents are in this view.5.9 Investment horizon as per age and income Bar Chart investmenthorizon 20 upto 1 year up to 3 yr up to 5 yr up to10 yr 15 10 C n u o t 5 0 18-25 26-35 36-50 >50 ageFig 5.9 Investment horizon as per age
  • Bar Chart investmenthorizon 25 upto 1 year up to 3 yr up to 5 yr up to10 yr 20 15 C n u o t 10 5 0 <15000 15000 - 30000 30000 -50000 >50000 incomeFig 5.10 Investment horizon as per incomeAnalysisOn study data revels that in any age group or of any income group usually theinvestor have investment horizon of three to five years. 36% of the respondent ofany age group have investment horizon of three years and 39% have horizon offive years. According to income class also the same data comes to picture. dueto the changing interest rates and different investment options available intoday’s economy investors usually do not go for ver large duration investmentschemes.
  • 5.10 Use of maturity amount as per age and income Bar Chart maturity 14 reinvst in same use for other purpose 12 invet in other product 10 8 C n u o t 6 4 2 0 18-25 26-35 36-50 >50 ageFig 5.11 Maturity sum use as per age Bar Chart maturity 20 reinvst in same use for other purpose invet in other product 15 10 C n u o t 5 0 <15000 15000 - 30000 30000 -50000 >50000 incomeFig 5.12 Maturity sum use as per income
  • AnalysisTo get the answer that how the investor use their maturity amount. we asked thequestion what do they do with the maturity amount. Most of the respondentreinvest their maturity amount in other investment options available that suits tothem, this investment can be in the same company or in other. 47% of therespondent replied that they would reinvest In some other options. 33% of therespondent said that they would reinvest in the same investment option theseinvestors constitute the loyal customers for a bank. 20% of the respondent utilizethe maturity sum for other purpose.
  • Chapter- 6 Conclusion, Limitations and Suggestions6.1 ConclusionThe researcher has found that Standard Chartered bank has a market segmentof higher income group investors, it has a loyal customers due to better serviceprovided by its employee. As the research was carried on to find the potentialcustomers for the bank and seeing the market segment of the bank I could saythat standard chartered should give proper training to its sales to convert thehigher income group segment for its product like mutual fund and ULIP as thissegment invest their money for good return they should be provided betterinvestment strategies. Researcher has also come to know that with the economicgrowth of India the investment pattern of investor is changing, the young agegroup can be targeted for mutual funds having income of Rs15000 -30000.6.2 Limitations 1) The number of respondent taken for study is small as compared to population so it does not represent the true picture of whole population. 2) Due to time limitations the sample size is not satisfactory and may influence the final findings. 3) The time period for the study was 8 weeks which was insufficient for such an extensive study. 4) Non participation of respondents. 5) There can be error in Sampling 6) lack of experience of the researcher 7) insufficient financial resources for the survey is a constrain in study
  • 6.3 SuggestionsThe segment (18-25) can be a potential customer segment for the bank as mostof the people are falling in the income group of less than Rs.15000 per month. orRs15000 – 30000 per month. The company can target this segment by offeringits ULIP product both as an insurance and investment product, which can providehigh returns as the investments and provide the insurance cover too, as a largesegment doesn’t have an insurance cover. The return in new Capital Unit GainPlan is around 20% which is quit good enough. Mutual Fund Schemes can alsobe offered to those respondents in this age group who are risk takers as inmutual funds small amounts can invested. The need is to make this segmentaware of the products like ULIP (which is promising return of 20-25% p.a.) andtap as many customers as possible. Also Positioning of the Mutual Funds shouldbe such that attracts customers.In order to tap the larger segment of 26-35 years age group customers ULIP canbe promoted as an investment option rather than an insurance product. thoughthis group is making most of its investment in ULIP and mutual fund yet thereremains a large portion of this population to be taped. Mutual funds and ULIPboth can be the best investment option for this segment.As the segment 36-50 years is an investing and risk taking segment, Mutualfunds promising higher returns can be promoted in this segment. The productULIP is also highly acceptable by this segment, so both of these products can bepromoted as a best investment options promising high returns and low risks. Thisgroup has a mix portfolio and there are moderate investors who can beconverted into potential customers for ULIP and mutual fund if they are providedgood returns and better services.In the segment of 50 & above age group people be targeting for the Mutual fundsas can be seen that very few people are investing M.Fs. this is because thissegment consists of risk averters as this segment have invested in FixedDeposits and government securities and insurance than any other investmentproduct as safety is the most important factor which is being considered while
  • investing by this segment. But these people are neutral for these investments.Thus theses products can be promoted as safe investments and better thanFD’s only then this segment can be tapped for mutual fund and ULIP.The income bracket less than Rs.15000 per month are basically safe investorsand have not and do not prefer investing in mutual funds except some risktakers. But they have started investing in ULIP as it gives good return andinsurance cover. Thus positioning of these products should be such that peopleare attracted towards this scheme. Emphasis on marketing of the productsshould be given..Income Bracket of Rs.30000-Rs.50000 are the strong contenders for investingtheir money and these people have invested mutual fund and ULIP, insuranceand fixed deposits. Moreover there is mixed preferences for their investmentsthus proper segmentation of the sample should be done accordingly marketingstrategies should be adopted.Though there is a small percentage of respondents in income bracket aboveRs.50000 who least prefer investing in ULIP. But this is the segment which canbe well targeted and their portfolio should be such that gives them more returns.The case of mutual fund is different as people strongly prefer investing in thisinvestment strategy. Thus emphasis for selling mutual fund in this incomebracket. Our survey reveals that most of the investor reinvest their amount moneyreceived after maturity with the same organization if the services provided aregood and returns in comparison to others are better. To create loyalty fromcustomers institutions should give importance to their customers and make theirinvestment process simple and easy. Rate of return should be comparative toother institutions.
  • APPENDIX Survey questionnaireDear respondent, this survey is carried to find the investment behavior ofconsumers and is for academic purpose only, all your disclosures will be keptconfidential.Respondent detailsName………………………………..address …………………………………………Ph no………………………………. ………………………………………...Please tick mark the suitable option.1. what is your present age?a) 18 – 25 b) 26 – 35 c) 36 – 50 d). >502. what is your monthly income?a) up to 15000 b) 15000 – 30000 c) 30000 – 50000 d) > 500003. in which of the options you have made your maximum investment?a) ULIP b) mutual fund c) fixed deposit d) traditional insurance e) ULIP+MF f) FD+ insurance4. what is your investment horizon?a) up to 1 year b) up to 3 year c). up to 5 year. d) up to 10 year e) > 10 year5. what factors would you consider most important before choosing aninvestment option?a) how quickly I will be able to increase my wealthb) the opportunity for steady growthc) the amount of monthly income the investment will generated) the safety of my investment principal6. your financial investment are influenced /based on which of the following?a) information received by broker agent.b) influence of peersc) self analysis7. what do u do on receiving the maturity amount of investment?a) reinvest in same investment options
  • b) invest in other investment optionedc) use for other purpose8.if u reinvest do u go with same company product?a) yesif service provided is goodb) yes if return on investment is betterc) yes if service and return provided are comparatively better.9. how would you classify your investment style? a) conservative b) moderate c) aggressive
  • BIBILIOGRAPHYBOOKS:Mutual funds in India by Sadhak, 2005.Indian Mutual Funds Handbook by Sankaran S.AMFI Mutual Fund Investments.Portfolio management and security analysis, Jordan and FisherWEBSITES:www.mutualfundsindia.comwww.valueresearchonline.comwww.myiris.comwww.standardchartered.comwww.hindubusinessline.comwww.amfiindia.com`
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