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Shri Ram Murti Smarak
          International Business School
                      FINANCE




“Cash Management awareness among Current account
          holders through Mutual Funds”




Ms. Vandna Misra                Ravindra kr. Vishwakarma

                                ______________________

                                 1101074
Index


•   Acknowledgment……………………………………….3

• Declaration          ……………………………………….4
•   Executive Summary…………………………………….5
•   Industry Profile   …………………………………….6
•   Company profile    ……………………………………15
•   Cash management ……………………………………..28
•   Objective          ………………………………………33
•   In scope           ……………………………………...33
•   Out scope          ……………………………………...33
•   Liquid fund…………………………………………….34
•   Research Methodology………………..………………57
•   Questionnaire………………………………………….58
•   Finding and Analysis………………………………….61
•   Database Collected……………………………………71
•   Findings………………………….…………………....76
•   Recommendations…….………………………………77
•   Bibliography…………………………………………..78

                                             2
Acknowledgement


A Successful completion of Project work is a result of well-organized and coordinated team
work. So at the completion of the project.

I take this opportunity to thank all the people who provided me proper guidance and help in
completing this project. First of all I would like to thank “Mr. Mohit Mehrotra “Regional Head at
Reliance capital asset management ltd. Besides him I am also thankful to Mr. Shashi Ranjan
(Cluster Manager), Mr. Alok Srivastava (Regional Operations Manager), Mr. Ankush Roy
Regional training manager and all other Relationship Managers, Staff at RCAM who provided
me valuable guidance in completing this project.

I express a deep sense of gratitude to my corporate mentor and facilitator of this project “Mr.
Vikas Jain “who continuously guided me throughout the Project.

I would also like to thank my faculty mentor “Ms. Vandna Misra” who provided me guidance
and support for successful completion of the project.

Last But not the least I would like to thank all my family members and friends for their
cooperation and inspiration for their direct and indirect help without this project could not be
completed.




                                                                                               3
Declaration

I hereby declare that the Project work entitled “CASH MANAGEMENT AWARENESS
AMONGST CURRENT ACCOUNT HOLDERS THROUGH MUTUAL FUND” submitted
by me for the Summer Internship during the Post Graduate Diploma in Management Program to
Shri Ram Murti Smarak International Business School is my original work and has not been
submitted earlier either to SRMS IBS or to any other Institution for the fulfillment of the
requirement for any course of study. I also declare that no chapter of this manuscript in whole or
in part is lifted and incorporated in this report from any earlier/other work done by me or others.




Place:

Date:                                                                        Signature of Student




Name of Student     : Ravindra Kumar Vishwakarma

Address             : H.No. 547/681

                     Jalalpur Kuti, Near A- Block
                                                                                                      4
Rajajipuram

                     Lucknow.




                                Executive summary
I have undertaken the project titled “Cash Management awareness among Current Account
Holders through Mutual Funds”

I have focused on the Reliance liquid Fund- which more effectively manages the short term cash
and provides better return than current traditional ways, likes current, savings and     FDs, with
minimal risk.

In this project I have covered the industrial Area of Transport Nagar, Latouche Road, Chowk,
and Hazratganj which is huge opportunity to be penetrated for the company as well as can be
highly useful for the owners of company to get the benefit of surplus fund due to their business
cycle.

The methodology adopted for framing the project was based on Questionnaire, Personal
interview and observation. This projected is restricted to Transport Nagar, Latouche Road,
Chowk, and Hazratganj.

During this project, I visited the various industries of the Area, and personally met with the
owners of the company, and had explained the concept of liquid fund. Their utility over current
traditional methods like Current and Saving Account.

During the conversation I had used the presentation to explain the concept in a better and
effective way. And got their feedback by recording their responses on a Questionnaire.

During my meeting with business owners, it was quite difficult to get the correct information
from the owners especially regarding the business cycle. Besides this there was difficulty in
getting owner’s attention as they were not willing to spare their time as most of the time during


                                                                                                5
survey it was business hours. At some places it was quite difficult to meet owner because he was
rarely present at the place. Thus at some places I had to interact with manager of the place.

So under these limitations I have drawn conclusion on the basis of questionnaires and
observations.


                                    Industry Profile
The Indian mutual fund industry is worth around Rs. 6.8 lakh crores which is the total assets
under management (AUM) as on April 2012.




                                     Mutual fund overview
                     Average asset under management- under various Mutual Fund companies




                                                                                                6
The origin of Mutual fund industry in India was first introduced by UTI in the year 1963. In the
beginning the growth was slow, but it accelerated from the year 1987 when other private players
entered the industry.


In the past decade, Indian mutual fund industry has seen dramatic improvements, both quality
wise as well as quantity wise. Before, the entry of other private players in mutual fund Industry
the total asset under management (AUM) was Rs. 67 crs. The private sector entry to the fund
family raised the AUM to Rs. 470 crs. in March 1993 and till April 2004, it reached the height of
1,540 crs.


But despite the growth of Indian Mutual Funds Industry the Total AUM is less than 11% of the
total deposits held by the Indian banking industry.


The main reason of its poor growth is that the mutual fund industry in India is new in the
country. Most of Indian investors are yet to be made aware of the concept; there is a need of
spreading awareness about the mutual funds among investors. Hence it is the responsibility of all
the Mutual fund companies that they not only just sell mutual funds but also make them realize
the need of investing in mutual funds.


                                                                                                    7
The mutual fund industry can be broadly put into four phases according to the development of
the sector. These are as follows:




First Phase - 1964-87


Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the
Reserve Bank of India and functioned under the Regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The
first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700
crores of assets under management.


Second Phase - 1987-1993


This phase was characterized by Entry of Public Sector in mutual funds. SBI Mutual Fund was
the first followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug
89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund
(Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under
management.


Third Phase - 1993-2003


With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 first Mutual
Fund Regulations were introduced. Kothari Pioneer (now merged with Franklin Templeton) was
the first private sector mutual fund registered in July 1993.


The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. Mutual fund industry now functions under the SEBI
(Mutual Fund) Regulations 1996.

                                                                                                  8
There was an increase in number of mutual fund companies due to entry of foreign players. At
the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores.
The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of
other mutual funds.


Fourth Phase - since February 2003


In this phase UTI was divided into two separate entities. One was the Specified Undertaking of
the Unit Trust of India with AUM of Rs.29, 835 crores (as on January 2003). The Specified
Undertaking of Unit Trust of India, functions under the administration and the rules of
Government of India and does not come under the purview of the Mutual Fund Regulations.


The second was the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of
the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of AUM and with the
setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with
recent mergers taking place among different private sector funds, the mutual fund industry has
entered its current phase of consolidation and growth. As at the end of September, 2004, there
were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.




                                                                                                 9
GROWTH IN ASSETS UNDER MANAGEMENT




                                    10
ORIGIN OF MUTUAL FUND INVESTING:-


When three Boston Securities executives pooled their money together in 1924 to create the first
mutual fund, they have no idea how popular mutual funds would become. The idea of pooling
money for investing purposes started in Europe in mid 1800s. The first pooling of money in the
US was created in 1893 for the faculty and staff of Harvard University. On March 21st, 1924 the
first official mutual fund was born. It was called the Massachusetts Investors Trust. After one
year the Massachusetts Investor Trust grew from $ 50000 in assets to 3, 92,000 in assets (with
around 200 shareholders). In contrast there are more than 10000 mutual funds in US today
totaling around $7 trillion (with approximately 83 million individual investors) according to the
Investment Company Institute.




                                                                                              11
Concept of Mutual Funds:
A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciations realized are shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost. The flow chart below describes broadly the working of a mutual fund:




                             Mutual Fund Operation Flow Chart




                                                                                               12
Organization of Mutual Funds in India:-

There are many entities involved and the diagram below illustrates the organizational set up of a
mutual fund:




                                                                                                13
Structure of Mutual Fund in India:
  •   Mutual Fund in India acts as a Unit Trust.

  •   The structure is required to be followed by mutual funds in India as per SEBI regulations,
      1996.

  •   It is constituted in the form of Public Trust created under the Indian Trust Act, 1882.

  •   The Trustees hold the Unit holders money in fiduciary capacity i.e. the money belongs to
      the unit holders and is entrusted to the fund for the purpose of the investment.

  •   The Trustees do not manage the portfolio of securities directly, for this specialist function
      they appoint the Asset Management Company.

  •   The trust is executed through a document called a Trust deed that is executed by the fund
      sponsor in favor of the trustees.

  •   The trust deed is required to be stamped as registered under the provisions of Indian
      Registration Act and registered with SEBI.

  •   The role of Asset Management Company is to act as the investment manager of the trust
      and must have a net worth of at least Rs. 10 Crores.




                                                                                                 14
Advantages & Disadvantages of Mutual Funds:
The advantages of investing in a Mutual Fund are:

•   Diversification: The best mutual funds design their portfolios so individual investments will
    react differently to the same economic conditions. For example, economic conditions like a
    rise in interest rates may cause certain securities in a diversified portfolio to decrease in
    value. Other securities in the portfolio will respond to the same economic conditions by
    increasing in value. When a portfolio is balanced in this way, the value of the overall
    portfolio should gradually increase over time, even if some securities lose value.

•   Professional Management: Most mutual funds pay topflight professionals to manage their
    investments. These managers decide what securities the fund will buy and sell.

•   Regulatory oversight: Mutual funds are subject to many government regulations that protect
    investors from fraud.

•   Liquidity: As compared to other mode of investment, it is easy to get your money out of a
    mutual fund. You can take out your money through cheque, online request or any other mode.

•   Convenience: You can usually buy mutual fund shares by mail, phone, or over the Internet.

•   Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment.
    Expenses for Index Funds are less than that, because index funds are not actively managed.
    Instead, they automatically buy stock in companies that are listed on a specific index




Disadvantages of Mutual Fund:

    •   Dilution: It’s possible to have too much diversification. Because funds have small
        holdings in so many different companies, high returns from few investments don’t make
                                                                                                15
much a difference on the overall return. Dilution is also the result of a successful fund
       getting too big. When money pours into funds that have had a strong success, the
       manager often has trouble finding a good investment for all the new money.

   •   Taxes: When making a decision about your money, Fund manager don’t consider your
       personal tax situation. For example, when a fund manager sells a security, a Capital-gain
       tax is triggered, which effect how profitable is individual from the sale. It might have
       been more advantageous for the individual to defer the capital gain liability.


                               Reliance Mutual fund
Reliance Mutual Fund is one of India’s leading Mutual Funds, with Average Assets under
Management (AAUM) of Rs. 78,112 Crores with about 64.65 Lakh investors and about70.99
Lakh folios.   Reliance Mutual Fund, a part of the Reliance Group, is one of the fastest growing
mutual funds in India. RMF offers investors a well-rounded portfolio of products to meet varying
investor requirements and has presence in 179 cities across the country. Reliance Mutual Fund
constantly endeavors to launch innovative products and customer service initiatives to increase
value to investors.
Reliance Capital Asset Management Limited (‘RCAM’) is the asset manager of Reliance Mutual
Fund. RCAM a subsidiary of Reliance Capital Limited, which holds 92.93% of the paid-up
capital of RCAM, the balance paid up capital being held by minority shareholders.


Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financial
services companies, and ranks among the top 3 private sector financial services and banking
companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life
and general insurance, private equity and proprietary investments, stock broking and other
financial services.



Name of Fund              Reliance Mutual Fund


Sponsor                   : Reliance Capital Limited


                                                                                                   16
Trustee               : Reliance Capital Trustee Co. Limited


Investment Manager / : Reliance Capital Asset Management Limited
AMC


Statutory Details     : The Sponsor, the Trustee and the Investment Manager are
                      incorporated under the Companies Act 1956.



                      Company structure




                                                                                  17
VISION STATEMENT

“To be a globally respected wealth creator, with an emphasis on customer care and a culture of
good corporate governance”




                                                                                            18
MISION STATEMENT

“To create and nurture a world-class, high performance environment aimed at delighting their
customers”ン




CORPORATE GOVERNANCE

CORPORATE GOVERNANCE POLICY

Reliance Capital Asset Management Ltd. has a vision of being a leading player in the Mutual
Fund business and has achieved significant success and visibility in the market. However, an
imperative part of growth and visibility is adherence to Good Conduct in the marketplace. In
Reliance Capital Asset Management Ltd., the implementation and observance of ethical
processes and policies has helped the company in standing up to the scrutiny of domestic and
international investors.

MANAGEMENT
The management at Reliance Capital Asset Management Ltd. is committed to good Corporate
Governance, which includes transparency and timely dissemination of information to its
investors and unit holders. The Board of Directors of RCAM is a professional body, including
well-experienced and knowledgeable Independent Members. Regular Audit Committee meetings
are conducted to review the operations and performance of the company.

EMPLOYEES
Reliance Capital Asset Management Ltd. has at present, a code of conduct for all its officers. It
has a clearly defined prohibition on insider trading policy and regulations. The management
believes in the principles of propriety and utmost care is taken while handling public money,
making proper and adequate disclosures.

All personnel at Reliance Capital Asset Management Ltd are made aware of their rights,
obligations and duties as part of the Dealing Policy laid down in terms of SEBI guidelines. They



                                                                                              19
are taken through a well-designed HR program, conducted to impart work ethics, the Code of
Conduct, information security, Internet and e-mail usage and a host of other issues.

One of the core objectives of Reliance Capital Asset Management Ltd. is to identify issues
considered sensitive by global corporate standards, and implement policies/guidelines in
conformity with the best practices as an ongoing process. Reliance Capital Asset Management
Ltd. gives top priority to compliance in true letter and spirit, fully understanding its fiduciary
responsibilities.

SPONSORS

Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a
subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the
balance paid up capital being held by minority shareholders.”, the sponsor. Reliance Mutual
Fund (RMF) has been sponsored by Reliance Capital Ltd (RCL). The promoter of RCL is AAA
Enterprises Private Limited. Reliance Capital Limited is a Non-Banking Finance Company.
Reliance Capital Limited is one of the India’s leading and fastest growing financial services
companies, and ranks among the top three private sector financial services and banking
companies, in terms of net worth.

THE AMC

RELIANCE CAPITAL ASSET MANAGEMENT COMPANY

Reliance Capital Asset Management Limited (RCAM), a company registered under the
Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund.

Reliance Capital Asset Management Limited (RCAM) was approved as the Asset Management
Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30,
1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with
RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual
Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment
Manager of Reliance Mutual Fund. The net worth of the Asset Management Company including
preference shares as on September 30, 2007 is Rs.152.02 crores.
                                                                                               20
“Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a
subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the
balance paid up capital being held by minority shareholders.”

Reliance Capital Asset Management Limited (RCAM) was approved as the Asset Management
Company for the Mutual Fund by SEBI by their letter no. IIMARP/1264/95 dated June 30, 1995.
The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM
dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds)
Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of
Reliance Mutual Fund. The net worth of the Asset Management Company including preference
shares as on March 31, 2005 is Rs.113.59 crores.




                                  SWOT analysis

A type of fundamental analysis of the health of a company by examining its strengths(S),
weakness (W), business opportunity (O), and any threat (T) or dangers it might be exposed to.




                                                                                                21
I.      STRENGTHS




•    Brand Name: Reliance Mutual fund is a part of – Anil Dhirubhai Ambani Group which
     is a well-known brand in India. It is also one of the fastest growing Mutual fund company
     in India. Thus it has a strong Brand Image in the minds of Indian consumers. Also RMF
     being a domestic “brand” plays a significant role in sale of product.




•    Strategy: As opposed to some of its competitors (e.g. HSBC, DSP Black rock), Reliance
     ADAG operates on a multi-brand strategy. The company operates under numerous well-
     known brand names, which allows the company to appeal to many different segments of
     the market. This makes Reliance more familiar in the minds of Indian Customer.




•    Fund performances: One of the most important reason for RMF’s popularity is the
     return that its schemes have given i.e.: the fund performance of RMF. The continuous
     dividend that the company keeps on declaring is one of the most attractive elements of
     RMF schemes. The Flagship product of RMF i.e. Reliance vision and Reliance Growth
     both have given returns approximately more than 50% since its inception. Both the
     schemes have declared dividend on regular basis. Also some of the schemes have been
     awarded for their best performances.

•    Strong channel partner network: Reliance Mutual fund is one of the few mutual funds
     to pioneer retail investing in the country by reaching out to investors and distributors in
     over 115 cities through branches and representatives across India. Hence the company’s
     strong distribution network is playing a great role in making reliance reaching out to
     maximum number of investors.

•    Strong Financial Base: Reliance has many sources of income throughout the group, and
     this diversity within the group makes the company more flexible and resistant to
                                                                                             22
economic and environmental changes. Unlike other Competitors they have enough
    financial strength to handle periods of Economic turmoil & slowdown.

•   Diverse portfolio: Reliance Mutual fund offers investors a well-rounded portfolio of
    products to meet varying investor requirements and has presence in 179 cities across the
    country. It has products to meet the needs of all types of consumers, and provides them
    greater flexibility and choice to them.

•   Excellent customer service: Ensures better customer services, convenience and
    communication by efficient network. It has better and superior customer support service
    which gives an edge to the company over its competitors.




    II. WEAKNESS

•   Emerging markets: Reliance Mutual Fund only covers Indian market and does not have
    global reach. As there is more investment demand in the United States, Japan and the rest

                                                                                          23
of Asia, Reliance should concentrate on these markets, especially in view of low global
      interest rates.




  •   No Guaranteed Return: Mutual funds are like many other investments without a
      guaranteed return: there is always a possibility that the value of your investment may
      depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds
      experience price fluctuations along with the stocks that make up the fund. This creates a
      doubt in the minds of Indian Consumer who generally prefer low risk, low return than
      high risk and high return.




  •   Fees: In mutual funds, the fees are classified into two categories: shareholder fees and
      annual operating fees. The shareholder fees, in the forms of loads and redemption fees are
      paid directly by shareholders purchasing or selling the funds. The annual fund operating
      fees are charged as an annual percentage – usually ranging from 1-3%. These fees are
      assessed to mutual fund investors regardless of the performance of the fund. As you can
      imagine, in years when the fund doesn’t make money, these fees only magnify losses.




  •   Less promotional expenditure: With growing competition there is a need to promote the
      product, so as increase recall rates in consumer’s mind. At present company do not
      spends much on advertisements and promotions.




III. OPPORTUNITIES




                                                                                             24
•   Potential markets: The Indian rural market has great potential. All the major market
      leaders consider the segments and real markets for their products. With Rural market
      which remains untouched, entry into this market could be highly beneficial.

  •   Rising inflation: In Past few years there has been a continuous increase in inflation rate,
      which makes traditional investment avenues ineffective. Thus Mutual funds have
      emerged as more paying avenues.
  •   Small and Medium enterprises: This is the segment which contributes 40% of the
      industrial output and 35% of direct exports; this sector has achieved significant
      milestones for the industrial development of India. According to mutual fund experts only
      10 % of these invest in mutual funds and rest 90% of these still remains as an untapped
      market. So along with existing markets their lies an opportunity to expand the base and
      capture this new market as in the future outlook these current SME segments are expected
      to turn into big corporates with current boom in the country. So it is essential to catch
      them young in initial growth cycle as they can turn out to be future large corpus client.
  •   International fund: Investing internationally opens up a huge market which is otherwise
      left untapped. India’s market at present constitutes only 5% of the world’s Stock market.
      Several other fund houses have invested in international market like Franklin Templeton
      and Fidelity International Opportunities fund. Moreover fund houses are now permitted
      by RBI to invest in ADR/GDR.




IV. THREATS




                                                                                                  25
•   Increased Competition: With increasing competition in the industry in terms of more
    upcoming schemes and better existing performances of mutual fund schemes of other
    AMCs is the threat posed to RMF. As per the distributors HDFC, Franklin Templeton and
    SBI mutual fund schemes are giving tough competition to the Reliance Mutual Fund.

•   High level of volatility in stock market: There is strong relationship between Volatility
    and market performance. Volatility tends to decline as the stock market rises and
    increases as the stock market falls. When volatility increases, risk increases and returns
    decreases. The market is so volatile now a day that no one is able to predict the market.
    Hence this has become a big threat for AMC.




•   Possibility of more stringent regulations by SEBI, RBI, and AMFI in future: Due to
    various scams and fluctuations in Financial sector, there may be chances of amendment
    of rules, which may hamper the growth of mutual funds in India.




                                                                                            26
TYPES OF SCHEMES

  A. EQUITY/GROWTH SCHEMES: The aim of growth funds is to provide capital
  appreciation over the medium to long- term. Such schemes normally invest a major part of
  their corpus in equities. Such funds have comparatively high risks. These schemes provide
  different options to the investors like dividend option, capital appreciation, etc. and the
  investors may choose an option depending on their preferences. The investors must indicate
  the option in the application form. The mutual funds also allow the investors to change the
  options at a later date. Growth schemes are good for investors having a long-term outlook
  seeking appreciation over a period of time.

  B. DEBT/INCOME SCHEMES: The aim of income funds is to provide regular and steady
  income to investors. Such schemes generally invest in fixed income securities such as bonds,
  corporate debentures, Government securities and money market instruments. Such funds are
  less risky compared to equity schemes. These funds are not affected because of fluctuations
  in equity markets. However, opportunities of capital appreciation are also limited in such
  funds. The NAVs of such funds are affected because of change in interest rates in the
  country. If the interest rates fall, NAVs of such funds are likely to increase in the short run
  and vice versa. However, long term investors may not bother about these fluctuations.

  C. SECTOR SPECIFIC SCHEMES: These are the funds/schemes which invest in the
  securities of only those sectors or industries as specified in the offer documents. E.g.
  Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc.
  The returns in these funds are dependent on the performance of the respective
  sectors/industries. While these funds may give higher returns, they are more risky compared
  to diversified funds. Investors need to keep a watch on the performance of those
  sectors/industries and must exit at an appropriate time. They may also seek advice of an
  expert.

  D. GOLD: Gold is seen as a symbol of security and a sign of prosperity. Indian consumers
  consider gold jewellery as an investment and are well aware of gold’s benefits as a store of
  value. Gold is also recognized as a form of money in India, a tradable liquid asset. It is one of
  the foundation assets for Indian households and a means to accumulate wealth from a long
                                                                                                27
term perspective. Gold investment has been in the culture of Indian tradition and has been on
rise amongst the modern investors as well due to the financial uncertainty and inflationary
pressures.




                                                                                          28
RELIANCE MUTUAL FUND



EQUITY                                    FIXED INCOME                            GOLD
         DIVERSIFIED LARGE CAP                    LIQUID
         Reliance Vision fund                         Reliance Liquidity Fund           ETF
         Reliance Top 200 Fund                        Reliance Liquid Fund-                Reliance Gold
         Reliance Quant Plus Fund                      Treasury Plan                         Exchange Traded
         Reliance NRI Equity Fund                     Reliance Liquid Fund-                 Fund
         Reliance Equity Fund                          Cash Plan:

                                                                                         FOF
                                                  ULTRA SHORT TERM                          Reliance Gold
         INDEX
                                                     Reliance Floating Rate                 Savings Fund
         Reliance Index Fund-Nifty
                                                      Fund- Short Term Plan
             Plan
                                                     Reliance Money Manager
         Reliance Index Fund-Sensex
                                                      Fund:
             Plan
                                                     Reliance Medium Term
                                                      Fund
         DIVERSIFIED MID & SMALL
         CAP
         Reliance Growth Fund                     SHORT TERM
         Reliance Long Term Equity                   Reliance Short Term
             Fund                                     Fund
         Reliance Small Cap Fund
                                                  LONG TERM
                                                     Reliance Regular Savings
         DIVERSIFIED MULTI CAP                        Fund- Debt Option
         Reliance Regular Savings                    Reliance Income Fund
             Fund-Equity option
         Reliance Equity
             Opportunities Fund                   DYNAMIC
                                                     Reliance Dynamic Bond
                                                      Fund
         BALANCED
            Reliance Regular
             Savings Fund-                        GILT
             Balanced Option                          Reliance Gilt Securities
                                                       Fund
         DIVERSIFIED THEME BASED
             Reliance Infrastructure             MIP
              Fund                                   Reliance Monthly
             Reliance Natural                        Income Plan
              Resources Fund


         SECTOR
            Reliance Banking Fund
              Reliance Diversified
               Power Sector Fund
              Reliance Media &
               Entertainment Fund
              Reliance Pharma Fund

         TAX SAVER
             Reliance Tax Saver
              (ELSS) Fund:
             Reliance Equity
              Linked Savings Fund-

         ARBITRAGE
             Reliance Arbitrage
              Advantage Fund


         ETF
                reliance Banking
                Exchange Traded
                                                                                                     29
                Fund
CASH MANAGEMENT AWARENESS AMONGST
  CURRENT ACCOUNT HOLDERS THROUGH
            MUTUAL FUND
What is Cash Management?

In most common sense, Cash Management means how an Individual or an organization can use
its excess funds/idle funds available to him in a best possible way and get a good return.

Cash Management has two aspects:

   •   Identifying the best option to invest the excess cash that could yield maximum return
       among various alternatives.
   •    Availability of cash in the times of cash crunch.

In Cash Management, following things should be managed:

           – cash flows into and out of the firm,
           – cash flows within the firm, and
           – cash balances held by the firm at a point of time by financing deficit or investing
               surplus cash




                                                                                               30
Present Scenario:

As per the RBI data (as on Sep 11) the total savings in Current and Saving account is about
54000 crs only in Lucknow city. This huge amount remains unutilized and does not provide any
return to the person having Current or Savings Accounts.

In general, retail Investors i.e. Traders, Business owners, Industries owner etc. have their funds in
Current, Saving, Fixed Deposit or such other options which They thinks is safe and will help
them in attaining their objective, whether it is Liquidity or Earning return or something else.

Retail investors are generally unaware about other avenues which can provide them both
Liquidity as well as help them in getting a good Return. Such an option is Liquid Fund –which is
debt category mutual fund.

Not only does the Liquid Fund offer higher post-tax returns, it also offers a reasonable degree of
safety in terms of the principal invested. Moreover, these investments are highly liquid. Most
retail investors, though, are either unaware of this or averse to liquid funds owing to concerns of
probable capital erosion or misconception regarding mutual funds. According to the Association
of Mutual Funds in India (AMFI), of Rs 2.22 trillion assets under management (AUM) in liquid
funds as on April 30, 2011, retail investors constituted less than 1% share while the rest was held
by high net-worth individuals, corporates, banks and financial institutions. On the other hand, the
size of savings bank deposits has continued to grow despite yielding only a nominal rate of
return. The quantum of money in savings & current bank accounts in banks is Rs. 4,483,777 cr as
on September, 2011, as majority of Indians continue to view savings bank deposits as the safest
option for parking liquid cash.

How do Liquid funds offer such high liquidity?

The answer to this question lies in the fact that Liquid funds primarily invest in money market
instruments such as certificates of deposits (CDs), commercial papers (CPs) and government
treasury bills. Such a portfolio helps liquid funds provide high liquidity to investors.
Accordingly, redemption requests are processed within 24 hours.
                                                                                                  31
* The interest rate varies with the tenor of the deposit
**1-year returns as on April 30, 2011 of CRISIL Mutual Fund Ranked schemes (for quarter ended March 31, 2011)
^ plus 3% cess
^^ plus 5% surcharge and 3% cess
@ 10% without indexation or 20% with indexation whichever is lower plus 3% cess
1 RBI data
2 Earlier banks calculated interest on savings account at 3.5% p.a. on the lowest available balance between the 11th of the
month till the end of the month. From April 1, 2010, interest is calculated on the available balance on a daily basis. This
way, savings account holders earn interest on every rupee deposited. Further, from May 2011, the interest rate has been
increased to 4%
3 In the case of most banks, the depositor would receive 1% less for any premature withdrawal


Where do liquid funds stand as compared to other similar options?




Although in case of Liquid Fund there is no guarantee of principal invested, but these are
relatively safe instruments as the portfolios of liquid funds mostly comprise ‘P1+’ rated CPs and
CDs (highest rating for these types of securities) with a maximum maturity of 91 days. CRISIL’s
rating of ‘P1+f’ signifies “very strong” protection against losses from credit defaults. However,
the marginally higher risk in liquid funds as compared to a savings deposit is compensated by
superior returns of liquid funds.

An analysis of liquid Funds vis-à-vis returns of saving deposits by CRISIL has been shown been
below. During the period under review, returns from liquid funds (1-year rolling returns) were
always higher than the interest offered on a savings bank account. Moreover, during periods of
rising inflation, returns from a liquid fund were typically higher, thereby reducing the effect of
inflation. This was not so in the case of a savings bank deposit where the returns were constant.
Therefore, during a high inflation cycle, investors have been better off investing in liquid funds.

                                                                                                                              32
* From April 1, 2010, interest is calculated on the available balance on a daily basis. Prior to this, banks calculated interest on
savings account at 3.5% p.a. on the lowest available balance between the 11th of the month till the end of the month.

Source: Ministry of Commerce and Industry for Inflation rates, RBI for savings bank deposit rate, CRISIL Mutual Fund
database for liquid fund returns




The tax advantage

There are two options of investing in a liquid fund:
     i)        Growth option and
     ii)       Dividend option.
The difference between the two options is that there are intermittent cash flows by way of
dividends in the case of the latter, while the growth option is cumulative in nature.
The dividend option also has various dividend frequencies, viz daily, weekly, fortnightly,
monthly, quarterly and half yearly.


In the case of growth option, returns from liquid funds would attract short term capital gains if
redeemed within a year (as per the investor’s income tax bracket) and long term capital gains if
redeemed after a year (10% without indexation and 20% with indexation plus cess).

                                                                                                                                      33
In the case of a dividend option, although dividends are tax-free in the hands of the investor,
there is a dividend distribution tax (DDT) 4 which is paid by the mutual fund house before the
dividend is distributed to unit holders. Investors who are not in need of frequent cash flows can
opt for the ‘dividend reinvestment plan’ so that these cash flows are reinvested into the same
liquid fund.
Post tax, liquid funds yield better returns vis-à-vis savings deposits, where the interest earned on
the latter would be taxed based on an individual’s tax slab. Investment in a fixed deposit would
also attract tax on returns as per the investor’s tax-bracket (maximum of 30% plus cess).

4 As per Union Budget 2011-12, the DDT rate in the case of institutional investors has been raised to 30% from 25%
(Plus 5% surcharge and 3% cess). This would take effect from June 1, 2011. There would, however, be no impact on
Retail investors who would continue to be charged DDT of 25% (plus 5% surcharge and 3% cess).




                                                                                                                     34
Objectives of the study:
       •   To know about the awareness level of current account holders regarding the short
           term cash management.

       •   To help them provide better avenues to get a return for their short term savings or
           surplus cash even for a very short period (like 2-3 days).

       •   Ultimately provide company an opportunity of greater penetration in the market
           through liquid funds.

       •   Focus on the current and Savings Account deposits in Lucknow which is about 54000
           cr. annually (as per latest RBI data till September 2011) which is huge opportunity for
           the Company and the participation of liquid fund is not even 1%.

                    BANKS                                DEPOSITS(CRORE)

            SBI and its associates                              11,209

             Nationalized Banks                                 42,475

                Foreign banks                                     320

                    Total                                     54004



In scope:
Industrial Areas of Transport Nagar, Kaiserbagh and different areas of Lucknow. Focus on
business people like pharmaceuticals distributors, Small and medium enterprise owners and
others. These people have a huge surplus fund due to difference in business cycles i.e.: cash
inflow and Cash outflow, which is deposited in current and saving accounts.

                                                                                               35
Out scope:
In this study we will not cover Service class people both in Government and private sector as
they have regular savings and do not have huge surplus cash




                                    LIQUID FUND
Basic Concept

The term 'liquid' in financial terms, it means an asset which is as good as hard cash. Real estate is
the least 'liquid' of all assets and a savings deposit is the most 'liquid' of all. Similarly, Liquid
Funds are a kind of mutual fund or debt fund which can be redeemed in as less as 24 hours.

Investments

Liquid funds invest in money market instruments. Money market is a market for short term
borrowing and lending. This market deals with debt instruments such as certificate of deposits,
commercial paper and treasury bills.

Basic features

    No entry and exit load
    Low annual fee of 0.30 to 0.70%
    Variable Minimum investment amount according to scheme
    Great tax benefit
    Easy liquidation
    An average 8% p.a return on liquid funds
    Liquid funds have the restriction that they can only have 10 per cent or less mark-to-
       market component, indicating a lower interest rate risk

Tax benefit




                                                                                                  36
If you invest in a short-term fixed deposit, the returns are taxable as per the investor's tax bracket.
Therefore, if you are in the highest tax bracket most of your returns from the fixed deposit would
be wiped out. (The tax rate is about 30%)

On the other hand with liquid funds, as mentioned before, if the dividend option is taken, the
returns are tax-free in the investor's hand. In case of Growth option it is about 27%.

Past performance

In recent years, liquid funds have an average return, between 7.7 per cent and 8.85 per cent.
Recent data shows that banks are taking fresh exposures in liquid funds which indicate a high
degree of safety and confidence in liquid funds.

This shows that liquid funds are a good product to invest in if you are looking to fulfill some
short-term goals, as well as get good return in case of idle funds.


Liquid funds vs. saving accounts:
The primary objective of having a savings account with a bank is to ensure that your surplus cash
remains safe and completely liquid. Along with this peace of mind you also earn a yearly interest
of 3.5 per cent on your funds. Liquid schemes of funds come very close to such accounts.

Such schemes are often used by high net worth individuals (HNIs) as savings account. Money in
a liquid fund can be redeemed within a day of submission of a withdrawal application.

Besides being liquid in nature, these funds offer higher and more tax-efficient returns than your
savings accounts. While you earn an annual interest of 3.5% on your deposits in savings account,
by investing in liquid funds you make on an average 5.5% a year. You can invest in these funds
for as short a period as one day. No exit load is charged for any withdrawal.

Also in case of liquid funds the net asset values (NAVs) are declared even on Saturdays and
Sundays. This feature makes a good return on the larger amount for the investors.




                                                                                                    37
RELIANCE LIQUID FUND

Reliance Liquid fund is an open ended liquid scheme which invests in money market and other
short term fixed income securities.
       Categories                     RMF Schemes                    Investor Profile
                                        Open Ended

                              Reliance Liquidity Fund(RLF)    Meant for short term cash
                                      Fund Managers
                                                              management for corporates and
                                                              is suitable for investors with
                               Amit Tripathi & Anju Chhajer   investment horizon between 1
                                                              day to 1 month
       Liquid Funds
                             Reliance Liquid Fund- Treasury   Meant for short term cash
                                    Plan( RLF-TP )            management and is suitable
                                                              for investors with investment
                                      Fund Manager            horizon between 1 day to 1
                                      Prashant Pimple         month


                            Reliance Liquid Fund- Cash Plan   Suitable to park very short
                                       ( RLF-TP )             term investment surplus for a
                                                              duration ranging from a day to
                                      Fund Manager            month
                                       Amit Tripathi




Key Benefits:

   •    High liquidity

                                                                                              38
•   Minimal interest rate risk,
  •   Choice of Investments - Growth Plan or Dividend Plan
  •   No Entry or Exit Load




                        Types of Reliance liquid fund

  1) Reliance liquidity Fund
  2) Reliance liquid Fund- Treasury plan
  3) Reliance liquid Fund – Cash Plan


Procedure to invest in Reliance Liquid Funds:
  1) For Individuals:

      For KYC (Know your Customer) form following are the essential required documents:

      a) Proof of       identity: PAN card with Photograph, Unique Identification Number (UID)
         (Aadhaar) / Passport / Voter ID

      b) Proof of Address: Passport/Voters Identity Card/Ration Card/, Utility bills like Telephone
         Bill (only land line), Electricity bill or Gas bill , Bank Account Statement/Passbook

  2) For Non Individuals:

      For KYC (Know your Customer) form following are the essential required documents:

      a) Proof of       identity: PAN card with Photograph, Unique Identification Number (UID)
         (Aadhaar) / Passport / Voter ID

      b) Proof of Address: Passport/Voters Identity Card/Ration Card/, Utility bills like Telephone
         Bill (only land line), Electricity bill or Gas bill , Bank Account Statement/Passbook




         Additional documents in case of Non individuals are as follows:
                                                                                                 39
Types of entity          Documentary Requirements



                    •   Copy of the balance sheets for the last 2 financial years (to
                        be submitted every year)

                    •   Copy of latest share holding pattern including list of all
                        those holding control, either directly or indirectly, in the
                        company in terms of SEBI takeover Regulations, duly
                        certified by the company secretary/Whole time
                        director/MD(to be submitted every year)

                    •   Photograph, POI, POA, PAN and DIN numbers of whole
   Corporate            time directors/two directors in charge of day to day
                        operations

                    •   Photograph, POI, POA, PAN of individual promoters
                        holding control – either directly or indirectly

                    •   Copies of the Memorandum and Articles of Association and
                        certificate of incorporation

                    •   Copy of the Board Resolution for investment in securities
                        market

                    •   Authorized signatories list with specimen signatures



 Partnership firm   •   Copy of the balance sheets for the last 2 financial years (to
                        be submitted every year)

                    •   Certificate of registration (for registered partnership firms
                        only)

                    •   Copy of partnership deed

                    •   Authorized signatories list with specimen signatures

                    •   Photograph, POI, POA, PAN of Partners

                                                                                     40
Trust             •   Copy of the balance sheets for the last 2 financial years (to
                                      be submitted every year)

                                  •   Certificate of registration (for registered trust only).Copy of
                                      Trust deed

                                  •   List of trustees certified by managing trustees/CA

                                  •   Photograph, POI, POA, PAN of Trustees



             HUF                  •   PAN of HUF

                                  •   Deed of declaration of HUF/List of coparceners

                                  •   Bank pass-book/bank statement in the name of HUF

                                  •   Photograph, POI, POA, PAN of Karta



Unincorporated Association or a   •   Proof of Existence/Constitution document
      body of individual
                                  •   Resolution of the managing body & Power of Attorney
                                      granted to transact business on its behalf

                                  •   Authorized signatories list with specimen signatures



 Banks/Institutional Investors    •   Copy of the constitution/registration or annual
                                      report/balance sheet for the last 2 financial years

                                  •   Authorized signatories list with specimen signatures

    Foreign Institutional
       Investors (FII)
                                  •   Copy of SEBI registration certificate

                                  •   Authorized signatories list with specimen signatures



   Army/Government Bodies         •   Self-certification on letterhead

                                  •   Authorized signatories list with specimen signatures

                                                                                                41
Registered Society            •   Copy of Registration Certificate under Societies
                                            Registration Act

                                        •   List of Managing Committee members

                                        •   Committee resolution for persons authorized to act as
                                            authorized signatories with specimen signatures

                                        •   True copy of Society Rules and Bye Laws certified by the
                                            Chairman/Secretary




Flowchart
Investment:

Step 1: Submission of Application form and KYC of investor

Step 2: Issue of unique folio number to investor

Step 3: Investing through either RTGS/ NEFT or Cheque before 2 pm

Step 4: Amount of mutual fund of equivalent NAV transferred



Redemption:

Step 1: Request of redemption either to AMC or Registrar before 3 pm

Step 2: Amount of money along with interest transferred to the account the next working day




                                                                                                    42
43
Reliance liquid Fund-
                            Cash Plan(G)
  Investment objective:

To generate optimal returns consistent with moderate level of risk and high liquidity.
Accordingly investment shall predominantly be made in Debt and Money market instruments.

Allocation of Assets:

Under normal circumstances the assets allocation under cash plan will be as follows:

                  INSTRUMENTS                           Indicative allocations (% of
                                                                                       Risk Profile
                                                                total assets)
                                                         Maximum          Minimum         High/
                                                                                       Medium/Low
 Money Market Instruments                                   100%              80%        Low


  Debt instruments (Corporate Debt, Financial
 Institutions & Banking Sector Bonds, Public                                            Low to
                                                           20%               0%
 Sector Bonds, Government Guaranteed Bonds and                                          Medium
 Related Instruments)

          Contact details
Scheme details:                                                 Load Details



Fund Type                      Open ended                       Entry load               N.A.
Investment Plan                Growth                           Exit Load                 0.00%
Launch Date                    Dec 1, 2007                      Load Comments             N.A.
Benchmark                      Crisil Liquid Fund
Asset Size(Crs.)               595.80 (Mar-31 2012)
Minimum Investment             Rs 5,000
Last Dividend                  N.A.
Bonus                          N.A.
Fund Manager                   Amit Tripathi
Notes                          N.A.
                                                                                                  44
Regd. Office:                                  Kamala Mills
                                               Compound, trade
                                               World, B-
                                               Wing ,Senapati
                                               Bajapt Marg
                                               ,Lower Parel(W),
                                               Mumbai,400013

Telephone no:                                  022-30994600

Fax no:                                        91 22 30414899

E-mail:
response@reliancemutual.com

Website:
www.reliancemutual.com

Reliance liquid fund- cash Plan (G)

NAV as on 1st June 2012- 17.660       (0.03)




                                                                  45
Performance:




Returns


Returns (NAV as on Jun 01 2012)   Absolute Returns (in
%)




                                                         46
Source: as per money control




Portfolio




Portfolio
composition:                               portfolio composition
                               cash/call
Equity            0.00%              -          3.53%
Others            0.00%        DEBT-
Debt             96.07%
Mutual              N.A.
funds
Money             0.00%
Market                                                  96.07%
CashCall         3.93%


                                                                   47
Reliance liquid fund- cash Plan (G)

NAV as on 1st June 2012- 17.660           (0.03)




         Reliance liquid
         fund- Treasury
          Plan- IP (G)
Investment objective:

To generate optimal returns consistent with moderate level of risk and high
liquidity. Accordingly investment shall predominantly be made in Debt and
Money market instruments.

                    INSTRUMENTS                           Indicative allocations
                                                                                      Risk Profile
                                                            (% of total assets)
                                                          Maximum Minimum          High/ Medium/Low
                                                                 50           0
                                                             %            %
       Call Money/ Cash/ Repo and Reverse Repo                                           Low

 Money Market Instruments (Milbar Linked
 Instruments, CPs, T-Bills, CDs or other Short Term         95%          0%              Low
 Papers)




                                                                                    48
Scheme details:                                       Load Details



Fund Type                   Open Ended                Entry load         N.A.
Investment Plan             Growth                    Exit Load          0.00%
Launch Date                 Dec 2003                  Load Comments      N.A.

Benchmark                   CRISIL Liquid Fund
Asset Size(Crs.)            6176.05( march 31 2012)
Minimum Investment          Rs. 100,00,000
Last Dividend               N.A.
Fund Manager                Prashant Pimple
Notes                       N.A.




          Contact details

          Regd. Office:                               Kamala Mills
                                                      Compound, trade
                                                      World, B-
                                                      Wing ,Senapati
                                                      Bajapt Marg
                                                      ,Lower Parel(W),
                                                      Mumbai,400013

          Telephone no:                               022-30994600

          Fax no:                                     91 22 30414899

          E-mail:
          response@reliancemutual.com


                                                                             49
Website:
www.reliancemutual.com
 Reliance liquid fund- Treasury Plan-IP-(G)

 NAV as on 1st June 2012- 26.573     (0.03%)




Performance:




                                               50
Returns:


Returns (NAV as on Jun 01 2012)          Absolute Returns (in
%)
period   Returns (%)   Rank       Year     Qtr. 1   Qtr. 2   Qtr3     Qtr. 4   Annual

1 mth    0.8           1          2012     2.4      -        -        -        -
3 mth    2.5           3          2011     2.0      2.0      2.1      2.2      8.9
6 mth    5.0           3          2010     1.0      1.1      1.3      1.6      5.2
1 yr.    9.7           4          2009     1.8      1.3      1.2      -0.2     5.5
2 yr.    8.3           16         2008     2.0      2.1      2.3      2.4      9.1
3 yr.    7.1                3     2007        1.9      1.9      1.8      2.0      7.9
5 yr.    7.5           2




Portfolio:




                                                                         51
Reliance liquid fund- cash Plan (G)

NAV as on 1st June 2012- 17.660       (0.03)




Portfolio composition:
Equity       0.00%
Others       0.00%
Debt        97.19%
Mutual         N.A.
funds
Money        0.00%
Market
CashCall    2.81%




                                               52
Investment objective:

            To generate optimal returns consistent with moderate level of risk and high
           liquidity. Accordingly investment shall predominantly be made in Debt and
                                                           Money market instruments.

                               INSTRUMENTS                            Indicative allocations
                                                                                                  Risk Profile
                                                                        (% of total assets)
                                                                      Maximum Minimum          High/ Medium/Low
                                                                              50          0
                                                                         %            %
                  Call Money/ Cash/ Repo and Reverse Repo                                            Low

            Money Market Instruments (Mibor Linked Instruments,
            CPs, T-Bills, CDs or other Short Term Papers)               95%          0%              Low



Scheme details:                                                Load Details



Fund Type                      Open Ended                      Entry load                    N.A.
Investment Plan                Growth                          Exit Load                  0.00%
Launch Date                    Mar 22 ,1998                    Load Comments
Benchmark                      CRISIL Liquid Fund
Asset Size(Crs.)               676.81( Mar 31 2012)
Minimum Investment             Rs. 5000
Last Dividend                  N.A.
Bonus                          N.A.
Fund Manager                   Prashant Pimple
Notes                          N.A.


          Regd. Office:                                          Kamala Mills
                                                                 Compound, trade
                                                                 World, B-
                                                                 Wing ,Senapati
                                                                 Bajapt Marg
                                                                 ,Lower Parel(W),
                                                                 Mumbai,400013

                                                                                                53
Telephone no:                                022-30994600

Fax no:                                      91 22 30414899

E-mail:
response@reliancemutual.com

Website:
www.reliancemutual.com
 Reliance liquid fund- Treasury Plan-(G)

  NAV as on 1st June 2012- 25.932   0.01 (0.02%)




Performance:




                                                              54
Returns:


Returns (NAV as on Jun 01 2012)          Absolute Returns (in
%)
period   Returns (%)   Rank       Year     Qtr. 1   Qtr. 2   Qtr3     Qtr. 4   Annual

1 mth    0.8           35         2012     2.2      -        -        -        -
3 mth    2.4           38         2011     2.0      2.1      2.2      2.2      8.6
6 mth    4.6           32         2010     0.9      1.1      1.3      1.6      5.0
1 yr.    9.2           25         2009     1.7      1.3      1.2      -0.2     5.3
2 yr.    8.0           23         2008     1.9      2.0      2.2      2.3      8.8
3 yr.    6.8            16        2007        1.8      1.8      1.7      1.9      7.6
5 yr.    7.2           15




Portfolio:



                                                                         55
Portfolio Composition:
Equity       0.00%
Others       0.00%
Debt        97.19%
Mutual         N.A.
funds
Money        0.00%
Market
CashCall    2.81%




   Reliance L iquidity
                         56
Reliance liquid fund- cash Plan (G)

          NAV as on 1st June 2012- 17.660           (0.03)



             Reliance L iquidity
                 fund - (G)
          Investment objective:

          To generate optimal returns consistent with moderate level of risk and high
          liquidity. Accordingly investment shall predominantly be made in Debt and
          Money market instruments.

                              INSTRUMENTS                           Indicative allocations
                                                                                                  Risk Profile
                                                                      (% of total assets)
                                                                    Maximum Minimum            High/ Medium/Low
                                                                           35           0
                                                                       %            %
                            Repo and Reverse Repo                                                    low

            Money Market Instruments (Milbar Linked
            Instruments, CPs, T-Bills, CDs) and other Short Term
                                                                     100%         65%                Low
            Debt Instruments (Floating Rate Notes, Short Tenor
            NCDs, PTCs) and /or Less than 1 year maturity G Secs.


Scheme details:                                                 Load Details



Fund Type                    Open Ended                         Entry load                    N.A.
Investment Plan              Growth                             Exit Load                   0.00%
Launch Date                  Jun 16 ,2005                       Load Comments               N.A.
Benchmark                    CRISIL Liquid Fund
Asset Size(Crs.)             8438.63( Mar 31 2012)
Minimum Investment            Rs. 5,00,00,000
Last Dividend                N.A.
Bonus                        N.A.
Fund Manager                 Amit Tripathi/ Anju Chhajer
Notes                        N.A.


          Contact details
                                                                                                57
Regd. Office:                                 Kamala Mills
                                             Compound, trade
                                             World, B-
                                             Wing ,Senapati
                                             Bajapt Marg
                                             ,Lower Parel(W),
                                             Mumbai,400013

Telephone no:                                022-30994600

Fax no:                                      91 22 30414899

E-mail:
response@reliancemutual.com

Website:
www.reliancemutual.com
 Reliance Liquidity Fund-(G)

  NAV as on 1st June 2012- 16.438   0.0 (0.03%)




Performance:
                                                                58
Returns:


period   Returns (%)   Rank     Year   Qtr. 1   Qtr. 2   Qtr3     Qtr. 4   Annual

1 mth    0.8           2        2012   2.4      -        -        -        -
3 mth    2.5           10       2011   2.0      2.1      2.2      2.3      9.0
6 mth    5.0           5        2010   1.0      1.2      1.4      1.7      5.4
1 yr.    9.7           5        2009   1.8      1.3      1.2      -0.2     5.5
2 yr.    8.5           3        2008   2.0      2.1      2.3      2.4      9.2
3 yr.    7.1                4   2007      2.0      2.0      1.8      2.0      8.2
5 yr.    7.6           12




                                                                     59
Portfolio:




Portfolio composition:
Equity   0.00
            %
Others   0.00
            %
Debt     91.9
          0%
Mutual   N.A.
funds
Money    0.00
Market      %
CashC   8.09
all         %




                         60
Research Methodology:
Sampling: The study was carried out in different areas of Lucknow among
retail investors like Manufacturing industry owners, Transporters, jewellers,
chikan industry owners etc. Since this area is scattered different people from
different areas were selected. The areas selected for this study were transport
nagar, Chowk, latouche road and Hazratganj. Due to time and various other
constraints, the total sample size is 55.

Data collection: Data was collected from both primary and secondary
sources. Primary data was collected through the      field visit to the various
areas. Also I personally interacted with the owners and other concerned
people of the organization, in order to collect the required information.

Secondary data was collected with the help of various resources like Google,
Grotal & Just dial to get the addresses of various industries in Lucknow.

Tools of data collection: Data was collected by conducting survey
using various tools like Questionnaire, Interview and Observation. All
possible efforts were made to interview the owner or such other concerned
person. Questionnaires were designed for this purpose, which were
purely    close    ended. Random sampling method was used for the
questionnaires to get filled

Questionnaire: As a part of quantitative data collection, a set of
questionnaire was prepared and accordingly data was collected from owners
of various industries. Effort was made to make questionnaire relevant for the
study as well as wipe out all the hypothetical words and anomalies. Only
relevant questions were included in questionnaire and effort was made to
keep it short and simple.




                                                                                  61
QUESTIONNAIRE


                                      Name: _________________________
                                                              Address:
   ______________________

                                                ______________________

Q1. What is your structure of business?

  a.    Sole proprietorship
  b.    Partnership
  c.    Private ltd.
  d.    Other(please specify)

Q2. What is your business cycle i.e.; Cash inflow and outflow?

   a.    1 days
   b.    3 days
   c.    Weekly basis
   d.    Fortnightly basis
   e.    Monthly basis

Q3. Does your business have any surplus fund?

         a. Yes
         b. No.
         c. Sometimes

Q4.Where do you invest your savings or surplus fund?

   a. Current accounts
   b. Saving accounts
   c. Any others(please specify)

Q5. Are you aware that you can get return while managing your short term
fund?

   a. Yes
   b. No
                                                                           62
c. Not sure



Q6 Are you aware that there are better avenues than current traditional way
of saving and current account?

   a. Yes
   b. No
   c. Not sure

Q7. Are you aware that current account surpluses can also earn interest by
parking in Mutual Funds even for one day?

   a. Yes
   b. No
   c. Maybe

Q8. Are you aware that there is no entry and exit load (charges) in case of
liquid funds?

   a. Yes
   b. No
   c. Not sure

 Q9.Would you like to know more about the avenues where you can manage
your cash efficiently?

   a. Yes
   b. No
   c. If Yes ,(then when)

Q10.Would you like to use this opportunity in near future?

          a. Yes
          b. No
          c. Not sure




Recommendations

_____________________________________________________________
_____________________________________________________________

                                                                              63
_____________________________________________________________
_________________________________________________




Interview: Interviews were taken to acquire information mainly from
owners of the business. This tool was used to give the knowledge regarding
cash management concept to owners. To convey them how this concept can
be useful for them in earning on the fund that is idle with them for a very
short duration. Then ultimately get the information regarding their business
on the questionnaire.

Field observation: Observation always plays a vital role in the conduction
of research. While collecting information on the field it was necessary to
observe the type of business, their working process and similar other things.

Constraints: There were various reasons due to which adequate sampling
could not be done and so a sufficient number of target people could not be
covered.

   •   The summer season was a big constraint due to which only
       limited number of industries could be covered.
   •   The accessibility was another reason. At most of the places it was
       difficult to meet the owner of the business, as they rarely are present
       at the factory.
   •   Time required to interact with the respondents was not sufficient as
       they were supposed to be busy the whole day in their work.
       Sometimes they were not available even to interact.
   •   At many places there was no owner at all, there were only managers
       or in charge at the place.




                                                                                 64
Findings and Analysis:
Analysis based on Questionnaire:

Question1


Ownership Structure:




Most of the owners selected for study were Sole proprietor, as they have
more decision making power and are easily available at the concerned place,
                                                                              65
than In case of private and Partnership firms. The other type of firms
included Government owned firms, Government contractor, company
owned firms etc. these firms are not allowed to use the funds of company
and are bounded by rules and regulations. It would be beneficial to target the
sole proprietors firm and in case of other firms there need to be proper
appointment with the concerned person and then target them, as they are not
directly approachable.




Question 2


Business cycle:




Business cycle is very crucial part of business; it is the difference between
the Cash Inflow and outflow. This is the main point where liquid fund can
play an important role. The days for which the business fund remains idle
can be utilized through liquid fund. This was the question which most

                                                                                 66
owners were unwilling to answer. Most of the firms carry on daily
transactions, but the other firms for which there is business cycle, the liquid
fund can play a beneficial role for the company.




Question 3


Availability of surplus fund:




This is the question which helps us to understand whether the business
operates on cash transaction with surplus fund or depends on Overdraft,
Credit or other such facilities. Most of the people were depended on
Overdraft, credit limit on Current account and similar other facilities of
                                                                                  67
Bank. Very few said that they had surplus or idle fund for short periods
which they keep for payment, contingencies and such other reasons. There
were also business people who occasionally had surplus fund. Thus there is
ample opportunity for fund, with both types of Businesses.




Question 4


Investment of Surplus fund:




This is the question to analyze what are the current avenues which are
utilized in business for parking funds. As expected more than half depended

                                                                              68
on Current account alone, while about 11% used both Current and Saving
Account. There were also persons who had saving accounts, but mostly on
individual basis. Other avenue where businessmen parked their funds are
fixed deposits, Public provident fund , overdraft , Auto sweep facility of
banks and even some of them have invested in equity related Mutual Funds.




Question 5:


Cash Management Awareness regarding
Short term:




                                                                             69
Now regarding the awareness part among business owners, whether they
know if they can get return on their funds even for a very short term period
of 1 -2 days. Most of them were unaware regarding this; As a matter of fact
they did not have any knowledge for short term cash management. About
one fourth were aware regarding this concept, and others were unsure.
Hence about three fourth people were made aware regarding such concept.




Question 6:


Awareness regarding other avenues than
Current & Saving Accounts:




                                                                               70
This question made clear that how corporates, businessmen still rely on
traditional saving and current account for parking funds. This is because of
lack of knowledge regarding the modern methods which ensure safety,
liquidity as well as help them in getting return. They still think that banks
are the safest place for them to park funds. Thus making them aware that
besides these there are other avenues which are as safe as banks, in addition
they will better earning than banks, was primary purpose.




Question 7

Awareness regarding daily interest in
Mutual Funds:

                                                                                71
This question introduces the concept regarding the Liquid funds. The most
striking feature of liquid fund is daily interest, which is not given by any
other product in the market. On the other hand the principal is secured as in
case of Current and saving accounts, with extra benefit of high liquidity and
earning. Very few were aware, regarding this and most of them were unsure
regarding such thing and rest had no idea regarding such facility.




Question 8


                                                                                72
Awareness regarding No entry and exit
load in Liquid fund:




As most people have basic perception that there is some entry and exit load
in case of mutual funds. Therefore it was necessary to make them aware that
there is no entry and exit load in case of Liquid fund. Most of the people had
no idea about this feature of liquid fund. Only a very few knew about this
feature of liquid fund.




                                                                                 73
Question 9:

Willingness to know more about Liquid
Fund:




This is the Question to know whether they wanted to know more about the
liquid fund. This could be done by having appointment with the person from
the Reliance mutual fund, who would provide full and detailed information
about the liquid Fund and solve all the fund related queries.
About one third of people were interested in knowing more about the fund
as they found it useful for the business. As far as people who were not
interested in knowing about liquid fund had various reasons like they were
mainly dependent on OD, Auto sweep and such other facilities, others did
not have Surplus or idle cash in the business; therefore they had no utility of
the fund.




                                                                                  74
Question 10

Willingness to use Liquid Fund in near
Future




It is the concluding Question to know whether they would like to use this
fund in the future. About one third of them said that they would like to use
this opportunity of near future as it can be useful for their business. About
one fifth of them were unsure regarding that whether they would use this
fund in near future. And rest said that they would not like to use due to
various reasons.




                                                                                75
Findings:


 1.) Some Jewelers use only cash for transactions and do not depend on
    credit. While others who have surplus cash prefer to invest in gold
    only.
 2.) Some owners do not want to disclose, their personal information as
    they are do not want to be disturbed by calls from company (like
    Lucknow chikan house, chikan mahal)

 3.) People generally view mutual fund as risky, as they generally relate
    mutual fund with share market and equity related schemes. Hence
    there is a need of making them aware about different type of
    schemes.

 4.) People find Auto sweep in facility more convenient as it is automatic
    and they do not have time to manage it.

 5.) In company owned business, there is no authority of owner to use the
    fund for any purpose. All the transactions are carried out from head
    office only.

 6.) Some have suggested it is one of the best funds of the company and
    should be promoted by the company on a greater scale.

 7.) Some people find it complicated to transfer fund from current
    Account to liquid fund and then back to Current Account (raj
    transport)
                                                                             76
8.) In case of Private limited companies, people like it for individual
   purpose also.




Recommendations:
1) Reliance should consider entering into the banking sector as most of
   the people like to have mutual fund and bank of the same company.
2) Company should spend more on Advertisement and Promotion part
   and should especially highlight this fund to make corporate sector
   aware regarding this fund.
3) More awareness should be created about the various types of fund,
   so that people do not view all fund related to the share market.
4) There should take measures to make people aware regarding mutual
   funds especially in Industrial areas where the owners are less aware.




                                                                           77
Bibliography
•   http://www.google.com
•   http://www.grotal.com
•   http://www.moneycontrol.com
•   http://www.reliancemutual.com/OurSchemes/Specific-
    Schemes.aspx?Id=9
•   http://managementfunda.com/reliance-mutual-fund/
•   http://www.mutualfundsindia.com/Assets%20_under
    %20_Management.asp
•   http://www.mutualfundsindia.com/amc.asp
•   http://www.moneycontrol.com/mccode/news/article/article_pdf.php?
    autono=711021&num=0
•   http://www.scribd.com/doc/25786437/Questionnaire-on-mutual-
    fund-invetment




                                                                       78

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Cash Management awareness among current account holders

  • 1. Shri Ram Murti Smarak International Business School FINANCE “Cash Management awareness among Current account holders through Mutual Funds” Ms. Vandna Misra Ravindra kr. Vishwakarma ______________________ 1101074
  • 2. Index • Acknowledgment……………………………………….3 • Declaration ……………………………………….4 • Executive Summary…………………………………….5 • Industry Profile …………………………………….6 • Company profile ……………………………………15 • Cash management ……………………………………..28 • Objective ………………………………………33 • In scope ……………………………………...33 • Out scope ……………………………………...33 • Liquid fund…………………………………………….34 • Research Methodology………………..………………57 • Questionnaire………………………………………….58 • Finding and Analysis………………………………….61 • Database Collected……………………………………71 • Findings………………………….…………………....76 • Recommendations…….………………………………77 • Bibliography…………………………………………..78 2
  • 3. Acknowledgement A Successful completion of Project work is a result of well-organized and coordinated team work. So at the completion of the project. I take this opportunity to thank all the people who provided me proper guidance and help in completing this project. First of all I would like to thank “Mr. Mohit Mehrotra “Regional Head at Reliance capital asset management ltd. Besides him I am also thankful to Mr. Shashi Ranjan (Cluster Manager), Mr. Alok Srivastava (Regional Operations Manager), Mr. Ankush Roy Regional training manager and all other Relationship Managers, Staff at RCAM who provided me valuable guidance in completing this project. I express a deep sense of gratitude to my corporate mentor and facilitator of this project “Mr. Vikas Jain “who continuously guided me throughout the Project. I would also like to thank my faculty mentor “Ms. Vandna Misra” who provided me guidance and support for successful completion of the project. Last But not the least I would like to thank all my family members and friends for their cooperation and inspiration for their direct and indirect help without this project could not be completed. 3
  • 4. Declaration I hereby declare that the Project work entitled “CASH MANAGEMENT AWARENESS AMONGST CURRENT ACCOUNT HOLDERS THROUGH MUTUAL FUND” submitted by me for the Summer Internship during the Post Graduate Diploma in Management Program to Shri Ram Murti Smarak International Business School is my original work and has not been submitted earlier either to SRMS IBS or to any other Institution for the fulfillment of the requirement for any course of study. I also declare that no chapter of this manuscript in whole or in part is lifted and incorporated in this report from any earlier/other work done by me or others. Place: Date: Signature of Student Name of Student : Ravindra Kumar Vishwakarma Address : H.No. 547/681 Jalalpur Kuti, Near A- Block 4
  • 5. Rajajipuram Lucknow. Executive summary I have undertaken the project titled “Cash Management awareness among Current Account Holders through Mutual Funds” I have focused on the Reliance liquid Fund- which more effectively manages the short term cash and provides better return than current traditional ways, likes current, savings and FDs, with minimal risk. In this project I have covered the industrial Area of Transport Nagar, Latouche Road, Chowk, and Hazratganj which is huge opportunity to be penetrated for the company as well as can be highly useful for the owners of company to get the benefit of surplus fund due to their business cycle. The methodology adopted for framing the project was based on Questionnaire, Personal interview and observation. This projected is restricted to Transport Nagar, Latouche Road, Chowk, and Hazratganj. During this project, I visited the various industries of the Area, and personally met with the owners of the company, and had explained the concept of liquid fund. Their utility over current traditional methods like Current and Saving Account. During the conversation I had used the presentation to explain the concept in a better and effective way. And got their feedback by recording their responses on a Questionnaire. During my meeting with business owners, it was quite difficult to get the correct information from the owners especially regarding the business cycle. Besides this there was difficulty in getting owner’s attention as they were not willing to spare their time as most of the time during 5
  • 6. survey it was business hours. At some places it was quite difficult to meet owner because he was rarely present at the place. Thus at some places I had to interact with manager of the place. So under these limitations I have drawn conclusion on the basis of questionnaires and observations. Industry Profile The Indian mutual fund industry is worth around Rs. 6.8 lakh crores which is the total assets under management (AUM) as on April 2012. Mutual fund overview Average asset under management- under various Mutual Fund companies 6
  • 7. The origin of Mutual fund industry in India was first introduced by UTI in the year 1963. In the beginning the growth was slow, but it accelerated from the year 1987 when other private players entered the industry. In the past decade, Indian mutual fund industry has seen dramatic improvements, both quality wise as well as quantity wise. Before, the entry of other private players in mutual fund Industry the total asset under management (AUM) was Rs. 67 crs. The private sector entry to the fund family raised the AUM to Rs. 470 crs. in March 1993 and till April 2004, it reached the height of 1,540 crs. But despite the growth of Indian Mutual Funds Industry the Total AUM is less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Most of Indian investors are yet to be made aware of the concept; there is a need of spreading awareness about the mutual funds among investors. Hence it is the responsibility of all the Mutual fund companies that they not only just sell mutual funds but also make them realize the need of investing in mutual funds. 7
  • 8. The mutual fund industry can be broadly put into four phases according to the development of the sector. These are as follows: First Phase - 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management. Second Phase - 1987-1993 This phase was characterized by Entry of Public Sector in mutual funds. SBI Mutual Fund was the first followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under management. Third Phase - 1993-2003 With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 first Mutual Fund Regulations were introduced. Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. Mutual fund industry now functions under the SEBI (Mutual Fund) Regulations 1996. 8
  • 9. There was an increase in number of mutual fund companies due to entry of foreign players. At the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds. Fourth Phase - since February 2003 In this phase UTI was divided into two separate entities. One was the Specified Undertaking of the Unit Trust of India with AUM of Rs.29, 835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functions under the administration and the rules of Government of India and does not come under the purview of the Mutual Fund Regulations. The second was the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes. 9
  • 10. GROWTH IN ASSETS UNDER MANAGEMENT 10
  • 11. ORIGIN OF MUTUAL FUND INVESTING:- When three Boston Securities executives pooled their money together in 1924 to create the first mutual fund, they have no idea how popular mutual funds would become. The idea of pooling money for investing purposes started in Europe in mid 1800s. The first pooling of money in the US was created in 1893 for the faculty and staff of Harvard University. On March 21st, 1924 the first official mutual fund was born. It was called the Massachusetts Investors Trust. After one year the Massachusetts Investor Trust grew from $ 50000 in assets to 3, 92,000 in assets (with around 200 shareholders). In contrast there are more than 10000 mutual funds in US today totaling around $7 trillion (with approximately 83 million individual investors) according to the Investment Company Institute. 11
  • 12. Concept of Mutual Funds: A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund: Mutual Fund Operation Flow Chart 12
  • 13. Organization of Mutual Funds in India:- There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund: 13
  • 14. Structure of Mutual Fund in India: • Mutual Fund in India acts as a Unit Trust. • The structure is required to be followed by mutual funds in India as per SEBI regulations, 1996. • It is constituted in the form of Public Trust created under the Indian Trust Act, 1882. • The Trustees hold the Unit holders money in fiduciary capacity i.e. the money belongs to the unit holders and is entrusted to the fund for the purpose of the investment. • The Trustees do not manage the portfolio of securities directly, for this specialist function they appoint the Asset Management Company. • The trust is executed through a document called a Trust deed that is executed by the fund sponsor in favor of the trustees. • The trust deed is required to be stamped as registered under the provisions of Indian Registration Act and registered with SEBI. • The role of Asset Management Company is to act as the investment manager of the trust and must have a net worth of at least Rs. 10 Crores. 14
  • 15. Advantages & Disadvantages of Mutual Funds: The advantages of investing in a Mutual Fund are: • Diversification: The best mutual funds design their portfolios so individual investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in value. Other securities in the portfolio will respond to the same economic conditions by increasing in value. When a portfolio is balanced in this way, the value of the overall portfolio should gradually increase over time, even if some securities lose value. • Professional Management: Most mutual funds pay topflight professionals to manage their investments. These managers decide what securities the fund will buy and sell. • Regulatory oversight: Mutual funds are subject to many government regulations that protect investors from fraud. • Liquidity: As compared to other mode of investment, it is easy to get your money out of a mutual fund. You can take out your money through cheque, online request or any other mode. • Convenience: You can usually buy mutual fund shares by mail, phone, or over the Internet. • Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment. Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific index Disadvantages of Mutual Fund: • Dilution: It’s possible to have too much diversification. Because funds have small holdings in so many different companies, high returns from few investments don’t make 15
  • 16. much a difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had a strong success, the manager often has trouble finding a good investment for all the new money. • Taxes: When making a decision about your money, Fund manager don’t consider your personal tax situation. For example, when a fund manager sells a security, a Capital-gain tax is triggered, which effect how profitable is individual from the sale. It might have been more advantageous for the individual to defer the capital gain liability. Reliance Mutual fund Reliance Mutual Fund is one of India’s leading Mutual Funds, with Average Assets under Management (AAUM) of Rs. 78,112 Crores with about 64.65 Lakh investors and about70.99 Lakh folios. Reliance Mutual Fund, a part of the Reliance Group, is one of the fastest growing mutual funds in India. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 179 cities across the country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. Reliance Capital Asset Management Limited (‘RCAM’) is the asset manager of Reliance Mutual Fund. RCAM a subsidiary of Reliance Capital Limited, which holds 92.93% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders. Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and proprietary investments, stock broking and other financial services. Name of Fund Reliance Mutual Fund Sponsor : Reliance Capital Limited 16
  • 17. Trustee : Reliance Capital Trustee Co. Limited Investment Manager / : Reliance Capital Asset Management Limited AMC Statutory Details : The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956. Company structure 17
  • 18. VISION STATEMENT “To be a globally respected wealth creator, with an emphasis on customer care and a culture of good corporate governance” 18
  • 19. MISION STATEMENT “To create and nurture a world-class, high performance environment aimed at delighting their customers”ン CORPORATE GOVERNANCE CORPORATE GOVERNANCE POLICY Reliance Capital Asset Management Ltd. has a vision of being a leading player in the Mutual Fund business and has achieved significant success and visibility in the market. However, an imperative part of growth and visibility is adherence to Good Conduct in the marketplace. In Reliance Capital Asset Management Ltd., the implementation and observance of ethical processes and policies has helped the company in standing up to the scrutiny of domestic and international investors. MANAGEMENT The management at Reliance Capital Asset Management Ltd. is committed to good Corporate Governance, which includes transparency and timely dissemination of information to its investors and unit holders. The Board of Directors of RCAM is a professional body, including well-experienced and knowledgeable Independent Members. Regular Audit Committee meetings are conducted to review the operations and performance of the company. EMPLOYEES Reliance Capital Asset Management Ltd. has at present, a code of conduct for all its officers. It has a clearly defined prohibition on insider trading policy and regulations. The management believes in the principles of propriety and utmost care is taken while handling public money, making proper and adequate disclosures. All personnel at Reliance Capital Asset Management Ltd are made aware of their rights, obligations and duties as part of the Dealing Policy laid down in terms of SEBI guidelines. They 19
  • 20. are taken through a well-designed HR program, conducted to impart work ethics, the Code of Conduct, information security, Internet and e-mail usage and a host of other issues. One of the core objectives of Reliance Capital Asset Management Ltd. is to identify issues considered sensitive by global corporate standards, and implement policies/guidelines in conformity with the best practices as an ongoing process. Reliance Capital Asset Management Ltd. gives top priority to compliance in true letter and spirit, fully understanding its fiduciary responsibilities. SPONSORS Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders.”, the sponsor. Reliance Mutual Fund (RMF) has been sponsored by Reliance Capital Ltd (RCL). The promoter of RCL is AAA Enterprises Private Limited. Reliance Capital Limited is a Non-Banking Finance Company. Reliance Capital Limited is one of the India’s leading and fastest growing financial services companies, and ranks among the top three private sector financial services and banking companies, in terms of net worth. THE AMC RELIANCE CAPITAL ASSET MANAGEMENT COMPANY Reliance Capital Asset Management Limited (RCAM), a company registered under the Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund. Reliance Capital Asset Management Limited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The net worth of the Asset Management Company including preference shares as on September 30, 2007 is Rs.152.02 crores. 20
  • 21. “Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by minority shareholders.” Reliance Capital Asset Management Limited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI by their letter no. IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The net worth of the Asset Management Company including preference shares as on March 31, 2005 is Rs.113.59 crores. SWOT analysis A type of fundamental analysis of the health of a company by examining its strengths(S), weakness (W), business opportunity (O), and any threat (T) or dangers it might be exposed to. 21
  • 22. I. STRENGTHS • Brand Name: Reliance Mutual fund is a part of – Anil Dhirubhai Ambani Group which is a well-known brand in India. It is also one of the fastest growing Mutual fund company in India. Thus it has a strong Brand Image in the minds of Indian consumers. Also RMF being a domestic “brand” plays a significant role in sale of product. • Strategy: As opposed to some of its competitors (e.g. HSBC, DSP Black rock), Reliance ADAG operates on a multi-brand strategy. The company operates under numerous well- known brand names, which allows the company to appeal to many different segments of the market. This makes Reliance more familiar in the minds of Indian Customer. • Fund performances: One of the most important reason for RMF’s popularity is the return that its schemes have given i.e.: the fund performance of RMF. The continuous dividend that the company keeps on declaring is one of the most attractive elements of RMF schemes. The Flagship product of RMF i.e. Reliance vision and Reliance Growth both have given returns approximately more than 50% since its inception. Both the schemes have declared dividend on regular basis. Also some of the schemes have been awarded for their best performances. • Strong channel partner network: Reliance Mutual fund is one of the few mutual funds to pioneer retail investing in the country by reaching out to investors and distributors in over 115 cities through branches and representatives across India. Hence the company’s strong distribution network is playing a great role in making reliance reaching out to maximum number of investors. • Strong Financial Base: Reliance has many sources of income throughout the group, and this diversity within the group makes the company more flexible and resistant to 22
  • 23. economic and environmental changes. Unlike other Competitors they have enough financial strength to handle periods of Economic turmoil & slowdown. • Diverse portfolio: Reliance Mutual fund offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 179 cities across the country. It has products to meet the needs of all types of consumers, and provides them greater flexibility and choice to them. • Excellent customer service: Ensures better customer services, convenience and communication by efficient network. It has better and superior customer support service which gives an edge to the company over its competitors. II. WEAKNESS • Emerging markets: Reliance Mutual Fund only covers Indian market and does not have global reach. As there is more investment demand in the United States, Japan and the rest 23
  • 24. of Asia, Reliance should concentrate on these markets, especially in view of low global interest rates. • No Guaranteed Return: Mutual funds are like many other investments without a guaranteed return: there is always a possibility that the value of your investment may depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds experience price fluctuations along with the stocks that make up the fund. This creates a doubt in the minds of Indian Consumer who generally prefer low risk, low return than high risk and high return. • Fees: In mutual funds, the fees are classified into two categories: shareholder fees and annual operating fees. The shareholder fees, in the forms of loads and redemption fees are paid directly by shareholders purchasing or selling the funds. The annual fund operating fees are charged as an annual percentage – usually ranging from 1-3%. These fees are assessed to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn’t make money, these fees only magnify losses. • Less promotional expenditure: With growing competition there is a need to promote the product, so as increase recall rates in consumer’s mind. At present company do not spends much on advertisements and promotions. III. OPPORTUNITIES 24
  • 25. Potential markets: The Indian rural market has great potential. All the major market leaders consider the segments and real markets for their products. With Rural market which remains untouched, entry into this market could be highly beneficial. • Rising inflation: In Past few years there has been a continuous increase in inflation rate, which makes traditional investment avenues ineffective. Thus Mutual funds have emerged as more paying avenues. • Small and Medium enterprises: This is the segment which contributes 40% of the industrial output and 35% of direct exports; this sector has achieved significant milestones for the industrial development of India. According to mutual fund experts only 10 % of these invest in mutual funds and rest 90% of these still remains as an untapped market. So along with existing markets their lies an opportunity to expand the base and capture this new market as in the future outlook these current SME segments are expected to turn into big corporates with current boom in the country. So it is essential to catch them young in initial growth cycle as they can turn out to be future large corpus client. • International fund: Investing internationally opens up a huge market which is otherwise left untapped. India’s market at present constitutes only 5% of the world’s Stock market. Several other fund houses have invested in international market like Franklin Templeton and Fidelity International Opportunities fund. Moreover fund houses are now permitted by RBI to invest in ADR/GDR. IV. THREATS 25
  • 26. Increased Competition: With increasing competition in the industry in terms of more upcoming schemes and better existing performances of mutual fund schemes of other AMCs is the threat posed to RMF. As per the distributors HDFC, Franklin Templeton and SBI mutual fund schemes are giving tough competition to the Reliance Mutual Fund. • High level of volatility in stock market: There is strong relationship between Volatility and market performance. Volatility tends to decline as the stock market rises and increases as the stock market falls. When volatility increases, risk increases and returns decreases. The market is so volatile now a day that no one is able to predict the market. Hence this has become a big threat for AMC. • Possibility of more stringent regulations by SEBI, RBI, and AMFI in future: Due to various scams and fluctuations in Financial sector, there may be chances of amendment of rules, which may hamper the growth of mutual funds in India. 26
  • 27. TYPES OF SCHEMES A. EQUITY/GROWTH SCHEMES: The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. B. DEBT/INCOME SCHEMES: The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations. C. SECTOR SPECIFIC SCHEMES: These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. E.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert. D. GOLD: Gold is seen as a symbol of security and a sign of prosperity. Indian consumers consider gold jewellery as an investment and are well aware of gold’s benefits as a store of value. Gold is also recognized as a form of money in India, a tradable liquid asset. It is one of the foundation assets for Indian households and a means to accumulate wealth from a long 27
  • 28. term perspective. Gold investment has been in the culture of Indian tradition and has been on rise amongst the modern investors as well due to the financial uncertainty and inflationary pressures. 28
  • 29. RELIANCE MUTUAL FUND EQUITY FIXED INCOME GOLD DIVERSIFIED LARGE CAP LIQUID Reliance Vision fund  Reliance Liquidity Fund ETF Reliance Top 200 Fund  Reliance Liquid Fund-  Reliance Gold Reliance Quant Plus Fund Treasury Plan Exchange Traded Reliance NRI Equity Fund  Reliance Liquid Fund- Fund Reliance Equity Fund Cash Plan: FOF ULTRA SHORT TERM  Reliance Gold INDEX  Reliance Floating Rate Savings Fund Reliance Index Fund-Nifty Fund- Short Term Plan Plan  Reliance Money Manager Reliance Index Fund-Sensex Fund: Plan  Reliance Medium Term Fund DIVERSIFIED MID & SMALL CAP Reliance Growth Fund SHORT TERM Reliance Long Term Equity  Reliance Short Term Fund Fund Reliance Small Cap Fund LONG TERM  Reliance Regular Savings DIVERSIFIED MULTI CAP Fund- Debt Option Reliance Regular Savings  Reliance Income Fund Fund-Equity option Reliance Equity Opportunities Fund DYNAMIC  Reliance Dynamic Bond Fund BALANCED  Reliance Regular Savings Fund- GILT Balanced Option  Reliance Gilt Securities Fund DIVERSIFIED THEME BASED  Reliance Infrastructure MIP Fund  Reliance Monthly  Reliance Natural Income Plan Resources Fund SECTOR  Reliance Banking Fund  Reliance Diversified Power Sector Fund  Reliance Media & Entertainment Fund  Reliance Pharma Fund TAX SAVER  Reliance Tax Saver (ELSS) Fund:  Reliance Equity Linked Savings Fund- ARBITRAGE  Reliance Arbitrage Advantage Fund ETF reliance Banking Exchange Traded 29 Fund
  • 30. CASH MANAGEMENT AWARENESS AMONGST CURRENT ACCOUNT HOLDERS THROUGH MUTUAL FUND What is Cash Management? In most common sense, Cash Management means how an Individual or an organization can use its excess funds/idle funds available to him in a best possible way and get a good return. Cash Management has two aspects: • Identifying the best option to invest the excess cash that could yield maximum return among various alternatives. • Availability of cash in the times of cash crunch. In Cash Management, following things should be managed: – cash flows into and out of the firm, – cash flows within the firm, and – cash balances held by the firm at a point of time by financing deficit or investing surplus cash 30
  • 31. Present Scenario: As per the RBI data (as on Sep 11) the total savings in Current and Saving account is about 54000 crs only in Lucknow city. This huge amount remains unutilized and does not provide any return to the person having Current or Savings Accounts. In general, retail Investors i.e. Traders, Business owners, Industries owner etc. have their funds in Current, Saving, Fixed Deposit or such other options which They thinks is safe and will help them in attaining their objective, whether it is Liquidity or Earning return or something else. Retail investors are generally unaware about other avenues which can provide them both Liquidity as well as help them in getting a good Return. Such an option is Liquid Fund –which is debt category mutual fund. Not only does the Liquid Fund offer higher post-tax returns, it also offers a reasonable degree of safety in terms of the principal invested. Moreover, these investments are highly liquid. Most retail investors, though, are either unaware of this or averse to liquid funds owing to concerns of probable capital erosion or misconception regarding mutual funds. According to the Association of Mutual Funds in India (AMFI), of Rs 2.22 trillion assets under management (AUM) in liquid funds as on April 30, 2011, retail investors constituted less than 1% share while the rest was held by high net-worth individuals, corporates, banks and financial institutions. On the other hand, the size of savings bank deposits has continued to grow despite yielding only a nominal rate of return. The quantum of money in savings & current bank accounts in banks is Rs. 4,483,777 cr as on September, 2011, as majority of Indians continue to view savings bank deposits as the safest option for parking liquid cash. How do Liquid funds offer such high liquidity? The answer to this question lies in the fact that Liquid funds primarily invest in money market instruments such as certificates of deposits (CDs), commercial papers (CPs) and government treasury bills. Such a portfolio helps liquid funds provide high liquidity to investors. Accordingly, redemption requests are processed within 24 hours. 31
  • 32. * The interest rate varies with the tenor of the deposit **1-year returns as on April 30, 2011 of CRISIL Mutual Fund Ranked schemes (for quarter ended March 31, 2011) ^ plus 3% cess ^^ plus 5% surcharge and 3% cess @ 10% without indexation or 20% with indexation whichever is lower plus 3% cess 1 RBI data 2 Earlier banks calculated interest on savings account at 3.5% p.a. on the lowest available balance between the 11th of the month till the end of the month. From April 1, 2010, interest is calculated on the available balance on a daily basis. This way, savings account holders earn interest on every rupee deposited. Further, from May 2011, the interest rate has been increased to 4% 3 In the case of most banks, the depositor would receive 1% less for any premature withdrawal Where do liquid funds stand as compared to other similar options? Although in case of Liquid Fund there is no guarantee of principal invested, but these are relatively safe instruments as the portfolios of liquid funds mostly comprise ‘P1+’ rated CPs and CDs (highest rating for these types of securities) with a maximum maturity of 91 days. CRISIL’s rating of ‘P1+f’ signifies “very strong” protection against losses from credit defaults. However, the marginally higher risk in liquid funds as compared to a savings deposit is compensated by superior returns of liquid funds. An analysis of liquid Funds vis-à-vis returns of saving deposits by CRISIL has been shown been below. During the period under review, returns from liquid funds (1-year rolling returns) were always higher than the interest offered on a savings bank account. Moreover, during periods of rising inflation, returns from a liquid fund were typically higher, thereby reducing the effect of inflation. This was not so in the case of a savings bank deposit where the returns were constant. Therefore, during a high inflation cycle, investors have been better off investing in liquid funds. 32
  • 33. * From April 1, 2010, interest is calculated on the available balance on a daily basis. Prior to this, banks calculated interest on savings account at 3.5% p.a. on the lowest available balance between the 11th of the month till the end of the month. Source: Ministry of Commerce and Industry for Inflation rates, RBI for savings bank deposit rate, CRISIL Mutual Fund database for liquid fund returns The tax advantage There are two options of investing in a liquid fund: i) Growth option and ii) Dividend option. The difference between the two options is that there are intermittent cash flows by way of dividends in the case of the latter, while the growth option is cumulative in nature. The dividend option also has various dividend frequencies, viz daily, weekly, fortnightly, monthly, quarterly and half yearly. In the case of growth option, returns from liquid funds would attract short term capital gains if redeemed within a year (as per the investor’s income tax bracket) and long term capital gains if redeemed after a year (10% without indexation and 20% with indexation plus cess). 33
  • 34. In the case of a dividend option, although dividends are tax-free in the hands of the investor, there is a dividend distribution tax (DDT) 4 which is paid by the mutual fund house before the dividend is distributed to unit holders. Investors who are not in need of frequent cash flows can opt for the ‘dividend reinvestment plan’ so that these cash flows are reinvested into the same liquid fund. Post tax, liquid funds yield better returns vis-à-vis savings deposits, where the interest earned on the latter would be taxed based on an individual’s tax slab. Investment in a fixed deposit would also attract tax on returns as per the investor’s tax-bracket (maximum of 30% plus cess). 4 As per Union Budget 2011-12, the DDT rate in the case of institutional investors has been raised to 30% from 25% (Plus 5% surcharge and 3% cess). This would take effect from June 1, 2011. There would, however, be no impact on Retail investors who would continue to be charged DDT of 25% (plus 5% surcharge and 3% cess). 34
  • 35. Objectives of the study: • To know about the awareness level of current account holders regarding the short term cash management. • To help them provide better avenues to get a return for their short term savings or surplus cash even for a very short period (like 2-3 days). • Ultimately provide company an opportunity of greater penetration in the market through liquid funds. • Focus on the current and Savings Account deposits in Lucknow which is about 54000 cr. annually (as per latest RBI data till September 2011) which is huge opportunity for the Company and the participation of liquid fund is not even 1%. BANKS DEPOSITS(CRORE) SBI and its associates 11,209 Nationalized Banks 42,475 Foreign banks 320 Total 54004 In scope: Industrial Areas of Transport Nagar, Kaiserbagh and different areas of Lucknow. Focus on business people like pharmaceuticals distributors, Small and medium enterprise owners and others. These people have a huge surplus fund due to difference in business cycles i.e.: cash inflow and Cash outflow, which is deposited in current and saving accounts. 35
  • 36. Out scope: In this study we will not cover Service class people both in Government and private sector as they have regular savings and do not have huge surplus cash LIQUID FUND Basic Concept The term 'liquid' in financial terms, it means an asset which is as good as hard cash. Real estate is the least 'liquid' of all assets and a savings deposit is the most 'liquid' of all. Similarly, Liquid Funds are a kind of mutual fund or debt fund which can be redeemed in as less as 24 hours. Investments Liquid funds invest in money market instruments. Money market is a market for short term borrowing and lending. This market deals with debt instruments such as certificate of deposits, commercial paper and treasury bills. Basic features  No entry and exit load  Low annual fee of 0.30 to 0.70%  Variable Minimum investment amount according to scheme  Great tax benefit  Easy liquidation  An average 8% p.a return on liquid funds  Liquid funds have the restriction that they can only have 10 per cent or less mark-to- market component, indicating a lower interest rate risk Tax benefit 36
  • 37. If you invest in a short-term fixed deposit, the returns are taxable as per the investor's tax bracket. Therefore, if you are in the highest tax bracket most of your returns from the fixed deposit would be wiped out. (The tax rate is about 30%) On the other hand with liquid funds, as mentioned before, if the dividend option is taken, the returns are tax-free in the investor's hand. In case of Growth option it is about 27%. Past performance In recent years, liquid funds have an average return, between 7.7 per cent and 8.85 per cent. Recent data shows that banks are taking fresh exposures in liquid funds which indicate a high degree of safety and confidence in liquid funds. This shows that liquid funds are a good product to invest in if you are looking to fulfill some short-term goals, as well as get good return in case of idle funds. Liquid funds vs. saving accounts: The primary objective of having a savings account with a bank is to ensure that your surplus cash remains safe and completely liquid. Along with this peace of mind you also earn a yearly interest of 3.5 per cent on your funds. Liquid schemes of funds come very close to such accounts. Such schemes are often used by high net worth individuals (HNIs) as savings account. Money in a liquid fund can be redeemed within a day of submission of a withdrawal application. Besides being liquid in nature, these funds offer higher and more tax-efficient returns than your savings accounts. While you earn an annual interest of 3.5% on your deposits in savings account, by investing in liquid funds you make on an average 5.5% a year. You can invest in these funds for as short a period as one day. No exit load is charged for any withdrawal. Also in case of liquid funds the net asset values (NAVs) are declared even on Saturdays and Sundays. This feature makes a good return on the larger amount for the investors. 37
  • 38. RELIANCE LIQUID FUND Reliance Liquid fund is an open ended liquid scheme which invests in money market and other short term fixed income securities. Categories RMF Schemes Investor Profile Open Ended Reliance Liquidity Fund(RLF) Meant for short term cash Fund Managers management for corporates and is suitable for investors with Amit Tripathi & Anju Chhajer investment horizon between 1 day to 1 month Liquid Funds Reliance Liquid Fund- Treasury Meant for short term cash Plan( RLF-TP ) management and is suitable for investors with investment Fund Manager horizon between 1 day to 1 Prashant Pimple month Reliance Liquid Fund- Cash Plan Suitable to park very short ( RLF-TP ) term investment surplus for a duration ranging from a day to Fund Manager month Amit Tripathi Key Benefits: • High liquidity 38
  • 39. Minimal interest rate risk, • Choice of Investments - Growth Plan or Dividend Plan • No Entry or Exit Load Types of Reliance liquid fund 1) Reliance liquidity Fund 2) Reliance liquid Fund- Treasury plan 3) Reliance liquid Fund – Cash Plan Procedure to invest in Reliance Liquid Funds: 1) For Individuals: For KYC (Know your Customer) form following are the essential required documents: a) Proof of identity: PAN card with Photograph, Unique Identification Number (UID) (Aadhaar) / Passport / Voter ID b) Proof of Address: Passport/Voters Identity Card/Ration Card/, Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill , Bank Account Statement/Passbook 2) For Non Individuals: For KYC (Know your Customer) form following are the essential required documents: a) Proof of identity: PAN card with Photograph, Unique Identification Number (UID) (Aadhaar) / Passport / Voter ID b) Proof of Address: Passport/Voters Identity Card/Ration Card/, Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill , Bank Account Statement/Passbook Additional documents in case of Non individuals are as follows: 39
  • 40. Types of entity Documentary Requirements • Copy of the balance sheets for the last 2 financial years (to be submitted every year) • Copy of latest share holding pattern including list of all those holding control, either directly or indirectly, in the company in terms of SEBI takeover Regulations, duly certified by the company secretary/Whole time director/MD(to be submitted every year) • Photograph, POI, POA, PAN and DIN numbers of whole Corporate time directors/two directors in charge of day to day operations • Photograph, POI, POA, PAN of individual promoters holding control – either directly or indirectly • Copies of the Memorandum and Articles of Association and certificate of incorporation • Copy of the Board Resolution for investment in securities market • Authorized signatories list with specimen signatures Partnership firm • Copy of the balance sheets for the last 2 financial years (to be submitted every year) • Certificate of registration (for registered partnership firms only) • Copy of partnership deed • Authorized signatories list with specimen signatures • Photograph, POI, POA, PAN of Partners 40
  • 41. Trust • Copy of the balance sheets for the last 2 financial years (to be submitted every year) • Certificate of registration (for registered trust only).Copy of Trust deed • List of trustees certified by managing trustees/CA • Photograph, POI, POA, PAN of Trustees HUF • PAN of HUF • Deed of declaration of HUF/List of coparceners • Bank pass-book/bank statement in the name of HUF • Photograph, POI, POA, PAN of Karta Unincorporated Association or a • Proof of Existence/Constitution document body of individual • Resolution of the managing body & Power of Attorney granted to transact business on its behalf • Authorized signatories list with specimen signatures Banks/Institutional Investors • Copy of the constitution/registration or annual report/balance sheet for the last 2 financial years • Authorized signatories list with specimen signatures Foreign Institutional Investors (FII) • Copy of SEBI registration certificate • Authorized signatories list with specimen signatures Army/Government Bodies • Self-certification on letterhead • Authorized signatories list with specimen signatures 41
  • 42. Registered Society • Copy of Registration Certificate under Societies Registration Act • List of Managing Committee members • Committee resolution for persons authorized to act as authorized signatories with specimen signatures • True copy of Society Rules and Bye Laws certified by the Chairman/Secretary Flowchart Investment: Step 1: Submission of Application form and KYC of investor Step 2: Issue of unique folio number to investor Step 3: Investing through either RTGS/ NEFT or Cheque before 2 pm Step 4: Amount of mutual fund of equivalent NAV transferred Redemption: Step 1: Request of redemption either to AMC or Registrar before 3 pm Step 2: Amount of money along with interest transferred to the account the next working day 42
  • 43. 43
  • 44. Reliance liquid Fund- Cash Plan(G) Investment objective: To generate optimal returns consistent with moderate level of risk and high liquidity. Accordingly investment shall predominantly be made in Debt and Money market instruments. Allocation of Assets: Under normal circumstances the assets allocation under cash plan will be as follows: INSTRUMENTS Indicative allocations (% of Risk Profile total assets) Maximum Minimum High/ Medium/Low Money Market Instruments 100% 80% Low Debt instruments (Corporate Debt, Financial Institutions & Banking Sector Bonds, Public Low to 20% 0% Sector Bonds, Government Guaranteed Bonds and Medium Related Instruments) Contact details Scheme details: Load Details Fund Type Open ended Entry load N.A. Investment Plan Growth Exit Load 0.00% Launch Date Dec 1, 2007 Load Comments N.A. Benchmark Crisil Liquid Fund Asset Size(Crs.) 595.80 (Mar-31 2012) Minimum Investment Rs 5,000 Last Dividend N.A. Bonus N.A. Fund Manager Amit Tripathi Notes N.A. 44
  • 45. Regd. Office: Kamala Mills Compound, trade World, B- Wing ,Senapati Bajapt Marg ,Lower Parel(W), Mumbai,400013 Telephone no: 022-30994600 Fax no: 91 22 30414899 E-mail: response@reliancemutual.com Website: www.reliancemutual.com Reliance liquid fund- cash Plan (G) NAV as on 1st June 2012- 17.660 (0.03) 45
  • 46. Performance: Returns Returns (NAV as on Jun 01 2012) Absolute Returns (in %) 46
  • 47. Source: as per money control Portfolio Portfolio composition: portfolio composition cash/call Equity 0.00% - 3.53% Others 0.00% DEBT- Debt 96.07% Mutual N.A. funds Money 0.00% Market 96.07% CashCall 3.93% 47
  • 48. Reliance liquid fund- cash Plan (G) NAV as on 1st June 2012- 17.660 (0.03) Reliance liquid fund- Treasury Plan- IP (G) Investment objective: To generate optimal returns consistent with moderate level of risk and high liquidity. Accordingly investment shall predominantly be made in Debt and Money market instruments. INSTRUMENTS Indicative allocations Risk Profile (% of total assets) Maximum Minimum High/ Medium/Low 50 0 % % Call Money/ Cash/ Repo and Reverse Repo Low Money Market Instruments (Milbar Linked Instruments, CPs, T-Bills, CDs or other Short Term 95% 0% Low Papers) 48
  • 49. Scheme details: Load Details Fund Type Open Ended Entry load N.A. Investment Plan Growth Exit Load 0.00% Launch Date Dec 2003 Load Comments N.A. Benchmark CRISIL Liquid Fund Asset Size(Crs.) 6176.05( march 31 2012) Minimum Investment Rs. 100,00,000 Last Dividend N.A. Fund Manager Prashant Pimple Notes N.A. Contact details Regd. Office: Kamala Mills Compound, trade World, B- Wing ,Senapati Bajapt Marg ,Lower Parel(W), Mumbai,400013 Telephone no: 022-30994600 Fax no: 91 22 30414899 E-mail: response@reliancemutual.com 49
  • 50. Website: www.reliancemutual.com Reliance liquid fund- Treasury Plan-IP-(G) NAV as on 1st June 2012- 26.573 (0.03%) Performance: 50
  • 51. Returns: Returns (NAV as on Jun 01 2012) Absolute Returns (in %) period Returns (%) Rank Year Qtr. 1 Qtr. 2 Qtr3 Qtr. 4 Annual 1 mth 0.8 1 2012 2.4 - - - - 3 mth 2.5 3 2011 2.0 2.0 2.1 2.2 8.9 6 mth 5.0 3 2010 1.0 1.1 1.3 1.6 5.2 1 yr. 9.7 4 2009 1.8 1.3 1.2 -0.2 5.5 2 yr. 8.3 16 2008 2.0 2.1 2.3 2.4 9.1 3 yr. 7.1 3 2007 1.9 1.9 1.8 2.0 7.9 5 yr. 7.5 2 Portfolio: 51
  • 52. Reliance liquid fund- cash Plan (G) NAV as on 1st June 2012- 17.660 (0.03) Portfolio composition: Equity 0.00% Others 0.00% Debt 97.19% Mutual N.A. funds Money 0.00% Market CashCall 2.81% 52
  • 53. Investment objective: To generate optimal returns consistent with moderate level of risk and high liquidity. Accordingly investment shall predominantly be made in Debt and Money market instruments. INSTRUMENTS Indicative allocations Risk Profile (% of total assets) Maximum Minimum High/ Medium/Low 50 0 % % Call Money/ Cash/ Repo and Reverse Repo Low Money Market Instruments (Mibor Linked Instruments, CPs, T-Bills, CDs or other Short Term Papers) 95% 0% Low Scheme details: Load Details Fund Type Open Ended Entry load N.A. Investment Plan Growth Exit Load 0.00% Launch Date Mar 22 ,1998 Load Comments Benchmark CRISIL Liquid Fund Asset Size(Crs.) 676.81( Mar 31 2012) Minimum Investment Rs. 5000 Last Dividend N.A. Bonus N.A. Fund Manager Prashant Pimple Notes N.A. Regd. Office: Kamala Mills Compound, trade World, B- Wing ,Senapati Bajapt Marg ,Lower Parel(W), Mumbai,400013 53
  • 54. Telephone no: 022-30994600 Fax no: 91 22 30414899 E-mail: response@reliancemutual.com Website: www.reliancemutual.com Reliance liquid fund- Treasury Plan-(G) NAV as on 1st June 2012- 25.932 0.01 (0.02%) Performance: 54
  • 55. Returns: Returns (NAV as on Jun 01 2012) Absolute Returns (in %) period Returns (%) Rank Year Qtr. 1 Qtr. 2 Qtr3 Qtr. 4 Annual 1 mth 0.8 35 2012 2.2 - - - - 3 mth 2.4 38 2011 2.0 2.1 2.2 2.2 8.6 6 mth 4.6 32 2010 0.9 1.1 1.3 1.6 5.0 1 yr. 9.2 25 2009 1.7 1.3 1.2 -0.2 5.3 2 yr. 8.0 23 2008 1.9 2.0 2.2 2.3 8.8 3 yr. 6.8 16 2007 1.8 1.8 1.7 1.9 7.6 5 yr. 7.2 15 Portfolio: 55
  • 56. Portfolio Composition: Equity 0.00% Others 0.00% Debt 97.19% Mutual N.A. funds Money 0.00% Market CashCall 2.81% Reliance L iquidity 56
  • 57. Reliance liquid fund- cash Plan (G) NAV as on 1st June 2012- 17.660 (0.03) Reliance L iquidity fund - (G) Investment objective: To generate optimal returns consistent with moderate level of risk and high liquidity. Accordingly investment shall predominantly be made in Debt and Money market instruments. INSTRUMENTS Indicative allocations Risk Profile (% of total assets) Maximum Minimum High/ Medium/Low 35 0 % % Repo and Reverse Repo low Money Market Instruments (Milbar Linked Instruments, CPs, T-Bills, CDs) and other Short Term 100% 65% Low Debt Instruments (Floating Rate Notes, Short Tenor NCDs, PTCs) and /or Less than 1 year maturity G Secs. Scheme details: Load Details Fund Type Open Ended Entry load N.A. Investment Plan Growth Exit Load 0.00% Launch Date Jun 16 ,2005 Load Comments N.A. Benchmark CRISIL Liquid Fund Asset Size(Crs.) 8438.63( Mar 31 2012) Minimum Investment Rs. 5,00,00,000 Last Dividend N.A. Bonus N.A. Fund Manager Amit Tripathi/ Anju Chhajer Notes N.A. Contact details 57
  • 58. Regd. Office: Kamala Mills Compound, trade World, B- Wing ,Senapati Bajapt Marg ,Lower Parel(W), Mumbai,400013 Telephone no: 022-30994600 Fax no: 91 22 30414899 E-mail: response@reliancemutual.com Website: www.reliancemutual.com Reliance Liquidity Fund-(G) NAV as on 1st June 2012- 16.438 0.0 (0.03%) Performance: 58
  • 59. Returns: period Returns (%) Rank Year Qtr. 1 Qtr. 2 Qtr3 Qtr. 4 Annual 1 mth 0.8 2 2012 2.4 - - - - 3 mth 2.5 10 2011 2.0 2.1 2.2 2.3 9.0 6 mth 5.0 5 2010 1.0 1.2 1.4 1.7 5.4 1 yr. 9.7 5 2009 1.8 1.3 1.2 -0.2 5.5 2 yr. 8.5 3 2008 2.0 2.1 2.3 2.4 9.2 3 yr. 7.1 4 2007 2.0 2.0 1.8 2.0 8.2 5 yr. 7.6 12 59
  • 60. Portfolio: Portfolio composition: Equity 0.00 % Others 0.00 % Debt 91.9 0% Mutual N.A. funds Money 0.00 Market % CashC 8.09 all % 60
  • 61. Research Methodology: Sampling: The study was carried out in different areas of Lucknow among retail investors like Manufacturing industry owners, Transporters, jewellers, chikan industry owners etc. Since this area is scattered different people from different areas were selected. The areas selected for this study were transport nagar, Chowk, latouche road and Hazratganj. Due to time and various other constraints, the total sample size is 55. Data collection: Data was collected from both primary and secondary sources. Primary data was collected through the field visit to the various areas. Also I personally interacted with the owners and other concerned people of the organization, in order to collect the required information. Secondary data was collected with the help of various resources like Google, Grotal & Just dial to get the addresses of various industries in Lucknow. Tools of data collection: Data was collected by conducting survey using various tools like Questionnaire, Interview and Observation. All possible efforts were made to interview the owner or such other concerned person. Questionnaires were designed for this purpose, which were purely close ended. Random sampling method was used for the questionnaires to get filled Questionnaire: As a part of quantitative data collection, a set of questionnaire was prepared and accordingly data was collected from owners of various industries. Effort was made to make questionnaire relevant for the study as well as wipe out all the hypothetical words and anomalies. Only relevant questions were included in questionnaire and effort was made to keep it short and simple. 61
  • 62. QUESTIONNAIRE Name: _________________________ Address: ______________________ ______________________ Q1. What is your structure of business? a. Sole proprietorship b. Partnership c. Private ltd. d. Other(please specify) Q2. What is your business cycle i.e.; Cash inflow and outflow? a. 1 days b. 3 days c. Weekly basis d. Fortnightly basis e. Monthly basis Q3. Does your business have any surplus fund? a. Yes b. No. c. Sometimes Q4.Where do you invest your savings or surplus fund? a. Current accounts b. Saving accounts c. Any others(please specify) Q5. Are you aware that you can get return while managing your short term fund? a. Yes b. No 62
  • 63. c. Not sure Q6 Are you aware that there are better avenues than current traditional way of saving and current account? a. Yes b. No c. Not sure Q7. Are you aware that current account surpluses can also earn interest by parking in Mutual Funds even for one day? a. Yes b. No c. Maybe Q8. Are you aware that there is no entry and exit load (charges) in case of liquid funds? a. Yes b. No c. Not sure Q9.Would you like to know more about the avenues where you can manage your cash efficiently? a. Yes b. No c. If Yes ,(then when) Q10.Would you like to use this opportunity in near future? a. Yes b. No c. Not sure Recommendations _____________________________________________________________ _____________________________________________________________ 63
  • 64. _____________________________________________________________ _________________________________________________ Interview: Interviews were taken to acquire information mainly from owners of the business. This tool was used to give the knowledge regarding cash management concept to owners. To convey them how this concept can be useful for them in earning on the fund that is idle with them for a very short duration. Then ultimately get the information regarding their business on the questionnaire. Field observation: Observation always plays a vital role in the conduction of research. While collecting information on the field it was necessary to observe the type of business, their working process and similar other things. Constraints: There were various reasons due to which adequate sampling could not be done and so a sufficient number of target people could not be covered. • The summer season was a big constraint due to which only limited number of industries could be covered. • The accessibility was another reason. At most of the places it was difficult to meet the owner of the business, as they rarely are present at the factory. • Time required to interact with the respondents was not sufficient as they were supposed to be busy the whole day in their work. Sometimes they were not available even to interact. • At many places there was no owner at all, there were only managers or in charge at the place. 64
  • 65. Findings and Analysis: Analysis based on Questionnaire: Question1 Ownership Structure: Most of the owners selected for study were Sole proprietor, as they have more decision making power and are easily available at the concerned place, 65
  • 66. than In case of private and Partnership firms. The other type of firms included Government owned firms, Government contractor, company owned firms etc. these firms are not allowed to use the funds of company and are bounded by rules and regulations. It would be beneficial to target the sole proprietors firm and in case of other firms there need to be proper appointment with the concerned person and then target them, as they are not directly approachable. Question 2 Business cycle: Business cycle is very crucial part of business; it is the difference between the Cash Inflow and outflow. This is the main point where liquid fund can play an important role. The days for which the business fund remains idle can be utilized through liquid fund. This was the question which most 66
  • 67. owners were unwilling to answer. Most of the firms carry on daily transactions, but the other firms for which there is business cycle, the liquid fund can play a beneficial role for the company. Question 3 Availability of surplus fund: This is the question which helps us to understand whether the business operates on cash transaction with surplus fund or depends on Overdraft, Credit or other such facilities. Most of the people were depended on Overdraft, credit limit on Current account and similar other facilities of 67
  • 68. Bank. Very few said that they had surplus or idle fund for short periods which they keep for payment, contingencies and such other reasons. There were also business people who occasionally had surplus fund. Thus there is ample opportunity for fund, with both types of Businesses. Question 4 Investment of Surplus fund: This is the question to analyze what are the current avenues which are utilized in business for parking funds. As expected more than half depended 68
  • 69. on Current account alone, while about 11% used both Current and Saving Account. There were also persons who had saving accounts, but mostly on individual basis. Other avenue where businessmen parked their funds are fixed deposits, Public provident fund , overdraft , Auto sweep facility of banks and even some of them have invested in equity related Mutual Funds. Question 5: Cash Management Awareness regarding Short term: 69
  • 70. Now regarding the awareness part among business owners, whether they know if they can get return on their funds even for a very short term period of 1 -2 days. Most of them were unaware regarding this; As a matter of fact they did not have any knowledge for short term cash management. About one fourth were aware regarding this concept, and others were unsure. Hence about three fourth people were made aware regarding such concept. Question 6: Awareness regarding other avenues than Current & Saving Accounts: 70
  • 71. This question made clear that how corporates, businessmen still rely on traditional saving and current account for parking funds. This is because of lack of knowledge regarding the modern methods which ensure safety, liquidity as well as help them in getting return. They still think that banks are the safest place for them to park funds. Thus making them aware that besides these there are other avenues which are as safe as banks, in addition they will better earning than banks, was primary purpose. Question 7 Awareness regarding daily interest in Mutual Funds: 71
  • 72. This question introduces the concept regarding the Liquid funds. The most striking feature of liquid fund is daily interest, which is not given by any other product in the market. On the other hand the principal is secured as in case of Current and saving accounts, with extra benefit of high liquidity and earning. Very few were aware, regarding this and most of them were unsure regarding such thing and rest had no idea regarding such facility. Question 8 72
  • 73. Awareness regarding No entry and exit load in Liquid fund: As most people have basic perception that there is some entry and exit load in case of mutual funds. Therefore it was necessary to make them aware that there is no entry and exit load in case of Liquid fund. Most of the people had no idea about this feature of liquid fund. Only a very few knew about this feature of liquid fund. 73
  • 74. Question 9: Willingness to know more about Liquid Fund: This is the Question to know whether they wanted to know more about the liquid fund. This could be done by having appointment with the person from the Reliance mutual fund, who would provide full and detailed information about the liquid Fund and solve all the fund related queries. About one third of people were interested in knowing more about the fund as they found it useful for the business. As far as people who were not interested in knowing about liquid fund had various reasons like they were mainly dependent on OD, Auto sweep and such other facilities, others did not have Surplus or idle cash in the business; therefore they had no utility of the fund. 74
  • 75. Question 10 Willingness to use Liquid Fund in near Future It is the concluding Question to know whether they would like to use this fund in the future. About one third of them said that they would like to use this opportunity of near future as it can be useful for their business. About one fifth of them were unsure regarding that whether they would use this fund in near future. And rest said that they would not like to use due to various reasons. 75
  • 76. Findings: 1.) Some Jewelers use only cash for transactions and do not depend on credit. While others who have surplus cash prefer to invest in gold only. 2.) Some owners do not want to disclose, their personal information as they are do not want to be disturbed by calls from company (like Lucknow chikan house, chikan mahal) 3.) People generally view mutual fund as risky, as they generally relate mutual fund with share market and equity related schemes. Hence there is a need of making them aware about different type of schemes. 4.) People find Auto sweep in facility more convenient as it is automatic and they do not have time to manage it. 5.) In company owned business, there is no authority of owner to use the fund for any purpose. All the transactions are carried out from head office only. 6.) Some have suggested it is one of the best funds of the company and should be promoted by the company on a greater scale. 7.) Some people find it complicated to transfer fund from current Account to liquid fund and then back to Current Account (raj transport) 76
  • 77. 8.) In case of Private limited companies, people like it for individual purpose also. Recommendations: 1) Reliance should consider entering into the banking sector as most of the people like to have mutual fund and bank of the same company. 2) Company should spend more on Advertisement and Promotion part and should especially highlight this fund to make corporate sector aware regarding this fund. 3) More awareness should be created about the various types of fund, so that people do not view all fund related to the share market. 4) There should take measures to make people aware regarding mutual funds especially in Industrial areas where the owners are less aware. 77
  • 78. Bibliography • http://www.google.com • http://www.grotal.com • http://www.moneycontrol.com • http://www.reliancemutual.com/OurSchemes/Specific- Schemes.aspx?Id=9 • http://managementfunda.com/reliance-mutual-fund/ • http://www.mutualfundsindia.com/Assets%20_under %20_Management.asp • http://www.mutualfundsindia.com/amc.asp • http://www.moneycontrol.com/mccode/news/article/article_pdf.php? autono=711021&num=0 • http://www.scribd.com/doc/25786437/Questionnaire-on-mutual- fund-invetment 78