The document provides an overview of the mutual funds industry in India from its origins in 1963 through 2003. It discusses the growth of the industry from only one company (UTI) until 1987 to include many private sector players by 2003. It summarizes key findings on unitholding patterns, including that individual investors accounted for 97% of accounts but only 41% of assets, while corporations contributed 57% of assets. It also discusses regulatory changes, new funds launched, dividends declared by various companies, and speeches given on the industry. The crisis at UTI from 1999-2002 is examined, noting structural flaws and officials using funds imprudently.

1. 1
CHAPTER- 1
INTRODUCTION

2. 1. INTRODUCTION
INDUSTRY OVERVIEW
The concept of mutual funds in India dates back to the year 1963. The era between 1963 and
1987 marked the existence of only one mutual fund company in India with Rs. 67bn assets
under management (AUM), by the end of its monopoly era, the Unit Trust of India (AXIS).
By the end of the 80s decade, few other mutual fund companies in India took their position in
mutual fund market.
The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual
Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual
Fund.
The succeeding decade showed a new horizon in indian mutual fund industry. By the end of
1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started
penetrating the fund families. In the same year the first Mutual Fund Regulations came into
existance with re-registering all mutual funds except AXIS. The regulations were further
given a revised shape in 1996.
Kothari Pioneer was the first private sector mutual fund company in India which has now
merged with Franklin Templeton. Just after ten years with private sector players penetration,
the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.
RANGE OF PRODUCTS AND SERVICES
MUTUAL FUNDS INDUSTRY UNITHOLING PATTERN
From the data collected from the mutual funds, the following has been observed
i) As on March 31, 2003 there was total number of 1.6 crore investors accounts (it is
likely that there may be more than one folio of an investor which might have been counted
more than once and actual number of investors would be less) holding units of Rs. 79,601
crore. Out of this total number of investors accounts, 1.56 crore was individual investors
accounts, accounting for 97.42% of the total number of investors accounts and contribute
Rs.32,691crore which is 41.07% of the total net assets. The total number of investors account
is lower in comparison with the total number of investors accounts as on March 31, 2002 as
the above data includes information only of AXIS Mutual Fund (which is registered with
SEBI on January 14, 2003). The data of the Specified Undertaking of AXIS (not registered
with SEBI) is not available with us.

3. ii) Corporates and institutions who form only 2.04% of the total number of investors
accounts in the mutual funds industry, contribute a sizeable amount of Rs.45,470 crore which
is 57.12% of the total net assets in the mutual funds industry.
iii) The NRIs/OCBs and FIIs constitute a very small percentage of investors accounts
(0.54%) and contribute Rs.1440.18crore (1.81%) of net assets.
UNITHOLDING PATTERN – PRIVATE/PUBLIC SECTOR MUTUAL FUNDS
From the analysis of data on unitholding pattern of Private Sector Mutual Funds and Public
Sector Mutual Funds, the following observations are made:-
1. Out of a total of 1.6 crore investors accounts in the mutual funds industry, (it is likely
that there may be more than one folio of an investor which might have been counted more
than once and therefore actual number of investors may be less) 42.93 lakh investors
accounts i.e 27% of the total investors accounts are in private sector mutual funds whereas
the 1.17 crore investors accounts ie.73% are with the public sector mutual funds which
includes AXIS Mutual Fund. However, the private sector mutual funds manage 71.2% of the
net assets whereas the public sector mutual funds own only 28.8% of the assets
RISK FACTORS
Mutual Funds and securities investments are subject to market risks and there can be no
assurance or guarantee that the Schemes objectives will be achieved. As with any investment
in securities, the Net Asset Value of Units issued under the Schemes may go up or down
depending on the various factors and forces affecting the capital market. Past performance of
the Sponsors/ AMC/ Mutual Fund/ Schemes and its affiliates do not indicate the future
performance of the Schemes of the Mutual Fund. The Sponsors are not responsible or liable
for any loss or shortfall resulting from the operations of the Schemes beyond their
contribution of Rs.10,000/- each made by them towards setting of the Mutual Fund The
Names of the Schemes do not in any manner indicate either the quality of the Schemes or
their future prospects and returns. Investors in the Schemes are not being offered any
guarantee / assured returns. Please read the Offer Documents carefully before investing.

4. SEBI OKAYS FIDELITY PLANS
Fidelity Investments has received permission from SEBI to launch equity funds in India.
Fidelity has already filed a draft prospectus with SEBI for its maiden equity fund, Fidelity
Equity. The proposed fund will invest across sectors. The portfolio will comprise 60-80
stocks. The fund will ordinarily invest up to 95 per cent of its assets in equities, but may
invest up to 20 per cent in money market instruments.
 SBI Mutual Fund has launched a mid-cap fund, Magnum MidCap Fund. It will invest
in stocks with a market capitalisation of Rs 200-2,000 crore. The minimum investment amount
is Rs 5,000. The fund offers dividend and growth options. The offer closes on March 17.
 Principal Mutual has declared dividend of 100 per cent on Principal Resurgent India
Equity Fund. The record date is February 24.
 Sundaram Mutual has declared dividends of 20 per cent each on Sundaram Select
Focus and Sundaram Growth. The record dates are March 4 and March 11 respectively.
 AXIS Mutual Fund has declared a maiden dividend of 12 per cent for AXIS Basic
Industries Fund and a dividend of 25 per cent for AXIS Growth and Value Fund. The record
date for both the dividend payments is March 10. The fund house has also declared a
dividend of 18 per cent for AXIS Balanced Fund. The record date is March 17.
 Franklin Templeton Mutual Fund has proposed a dividend for Franklin India
Taxshield. The record date is March 18.
 HDFC Mutual proposes to declare dividend on HDFC Prudence and HDFC Balanced
Fund. The record date for the dividend will be March 18.
 Franklin Templeton Mutual has mopped up Rs 1,950 crore from the initial offering of
Franklin Flexicap. This is the largest amount mobilised by any open-end fund IPO. The fund
will be open for an ongoing basis from March 7.
SEBI'S NEW CHECKS AND BALANCES
Alliance Capital Advisor: Alliance Capital Management Holding LLP has appointed
Blackstone Group LP to advise it on its Indian operations. The latter will look at strategic
options for the mutual fund business. There have been indications that Alliance may want to
wind up its mutual fund operations in India.

5. AXIS BANK IS NEW NAME FOR UTI BANK
Axis Bank is the new name for UTI Bank. Axis Bank is born out of the pressure on UTI Bank
to shed its brand name after the split of the erstwhile UTI. Though UTI was a government
institution, its subsidiary UTI Bank has been categorized as a private sector bank, according
to RBI guidelines. The name change to Axis Bank means that UTI Bank will have to undergo
a re-branding exercise soon. The re-branding process was completed by September 2007.
After the split of UTI, entities like UTI Securities, UTI MF and UTI Bank were all allowed to
retain the UTI brand name for a while. Now that it is time for UTI Bank to shed the brand
name, it has opted to go for the more modern-sounding Axis Bank. Axis Bank chairman will
be PJ Nayak, who is currently chairman and managing director of UTI Bank. Axis Bank, this
means, had to split the top post into two, as required by new corporate governance
regulations.
The recommendation for name change to Axis Bank had arisen from the existence of several
shareholder-unrelated entities using the UTI brand, and the consequent brand confusion that
this generates. The name took effect consequent to the approval of shareholders, Reserve
Bank of India and the Central Government (Registrar of Companies).

6. AXIS Crisis & After How the Crisis Originated
What was the Crisis that Overtook AXIS during 1999 to 2002
Mr.YogiAggarwal, columnist of "india-syndicate.com/" further points out in his illuminating
articles published online-
"The facts as revealed by the government appointed Tarapore Committee and the other
committees which preceded it show a trail of bungling, structural flaws and AXIS officials
using public money in an "imprudent" manner to help various controversial and powerful
companies in stock exchange dealings that cost the AXIS several thousands of crores and
severely eroded investor wealth. What they reveal is not just incompetence but a flouting of
all prudential norms to favour certain individuals and companies.
"While the Tarapore Committee saw no reason to believe in any "breach of confidentiality"
leading to the large scale redemptions in Unit-64 during April and May 2001 when around Rs
5,000 crore was taken out by big corporates and banks from Unit-64, it severely criticized the
way the scheme worked. A fundamental flaw was that Unit-64 lived beyond its means,
rewarding unitholders with dividends beyond its capabilities and propping up the price of
Units well beyond their real worth.
MUTUAL FUNDS TO BE MORE TRANSPARENT
Finance Minister YashwantSinha called upon the mutual funds to focus on product
innovation, equity research, risk management and market reach, and endeavour to instil
greater confidence among investors. He was addressing the sixth annual seminar of the
mutual fund industry in Bombay on Thursday.
Citing RBI data and the SEBI NCAER survey, Sinha said out that less than 8 per cent of
households channelise their savings into capital markets and that just 1 per cent of household
investment is in equity markets.
Sinha felt that higher transparency and good corporate governance by mutual funds could
attract greater quantity of household savings, which they could cost effectively deploy in the
capital markets.
Sinha said that inadequate institutional mechanisms may be the reason for households shying
away from the market. He said all that the retail investor looked for was to maximise return
on investments, while the market volatility had placed some constraints. He opined that

7. mutual funds should spread their findings of equity research, educate the investors and raise
their level of awareness. This would have an impact and then capital market investment can
become a reasonable proposition for retail investors.
Referring to the stock market, Sinha said that the popular perception of bulls and bears
impacting the market has undergone a sea change. He felt that a better way to correct short-
term volatility is to place more emphasis on investments that could be governed by medium-
and long-term views based on scientific research. He asserted these developments will enable
mutual funds to create greater confidence in the mind of investors.
Among the issues under active consideration are:
 Reduction in the processing of investor applications in the initial offer period to 42
days from 90 days;
 Use of unclaimed funds lying with mutual funds for investor education;
 Creation of level playing field between mutual funds and FIIs in the context of
international investing
 Formulation a code of conduct and development of best practices in the industry;
 Standardisation of portfolio disclosures;
 Modification in the structure of mutual funds to company form of organisation; and
 Publication of the annual reports of asset management companies.
He said that the Indian markets are very safe, despite the growing volatility that has been seen
in the recent period.
AXIS chairman, P S Subramanyam said that the quality of investor services in the industry
has grown over the years. He said there is a scope to increase the penetration and volumes in
the mutual fund industry by reaching out to more investors. He noted that technology has
significantly altered the manner in which mutual funds conduct their business.
In the context of globalisation of capital markets, he pointed out that risk management has
become critical for mutual funds. He also indicated that corporations will have to adopt best
practices in information disclosure and dissemination.
He said that as stakeholders in companies in which they invest, mutual funds have the
responsibility to ensure acceptable standards of disclosures. They have a constructive role to
play in creating an environment that help in adoption of best practices and good governance.

8. This will go a long way in enhancing shareholder value leading to enhancement of unit-
holder value.
A P Kurien, chairman, Association of Mutual Funds of India, mentioned that it is for the first
time that the finance minister, the RBI governor and the SEBI chairman came together on a
common platform to address mutual funds. This is indicative of high growth prospects, he
opined. He suggested that the pension fund segment be opened to the mutual fund industry.
As it went about its inquiries, the JPC asked the Director-General of Income Tax, Mumbai, to
examine afresh the possibility of collusion between the broker lobby and big business houses.
The reply was perfunctory: there was no reason in the prevalent circumstances, said the
official concerned, to believe that there was any such nexus. "No cases were found," the JPC
records, "where funds were placed by industrial houses directly with the brokers enabling
them to play... (the market) with a view to create artificial booms or depressions so as to book
abnormal profits to the detriment of the common investor."
As a body with wide-ranging powers of summoning evidence, the JPC could not obviously
remain content with this evasion of reality. But its own inquiries were, by all accounts,
clouded by a wilful desire to mystify rather than illuminate. After identifying no fewer than
727 scrips which witnessed rapid and unexplained rises in values in the months preceding
March 2001, and 199 which witnessed a rapid fall in prices following the discovery of the
scam, the JPC asked SEBI for detailed explanations. The outcome was inconclusive: the JPC
has identified no fewer than 15 companies where there is evidence to believe that the
collusive nexus between brokers and promoters could have had a serious impact on market
behaviour. These include well-known companies like Zee Telefilms, Ranbaxy and Lupin
Laboratories, as well as companies that have deservedly entered the annals of infamy, like
Cyberspace Infosys, Himachal Futuristic and DSQ Software.

9. MOST revealingly, the JPC has virtually disowned its responsibility to ascertain the true
picture, offering an alibi that must seem rather lame. As the JPC explains in the rather
tortured syntax that its report is suffused with: "SEBI furnished four sets of interim reports
inclusive of its investigation regarding scrips of certain corporate bodies. The Committee's
insistence for SEBI's final findings regarding the role of promoters/ corporate bodies in the
price manipulation of the scrips yielded yet another set of reports, most of which were again
of interim nature and were received as late as November 2002. Due to non-availability of
final report from SEBI, the Committee could not have the opportunity to take oral evidence
of these corporate bodies. The Committee urge SEBI, the Department of Company Affairs
and other investigative agencies to expedite and complete their investigations..."
This must seem a rather disappointing abdication of responsibility by the JPC, especially
since it is followed by the definitive finding that "there are valid reasons to believe that the
corporate house-broker-bank-FIIs (foreign institutional investor) nexus played havoc in the
Indian capital market quite sometime (sic) now through fraudulent manipulations of prices at
the cost of the small investors". But there is also a telling admission thrown in that the
abdication of responsibility is a direct consequence of the JPC's failure to exercise its powers
appropriately: "This Committee were severely handicapped in the matter of making any
purposeful recommendations because of non-availability of required support from concerned
regulatory and other bodies with necessary material."
By any criterion, this admission of helplessness by a committee of Parliament, which has
endowed the regulatory authorities with all their powers, must seem extraordinary. And by
any reasonable evaluation, the material that the JPC had to draw its inferences from was
nowhere near as meagre as it has made out. SEBI had submitted a series of voluminous
reports early in 2002, which went into a microscopic examination of the many dubious
transactions that culminated in the short-lived bull run in the markets after the Union Budget
was presented in February 2001. The picture it drew was fairly clear: though the Budget in
itself provided rather a scant basis for a broad-based investment fervour, a small cartel of bull
operators sought to utilise the momentary euphoria it had engendered to drive up prices and
liquidate the long exposures they had taken. It was a self-defeating exercise since a rival
cartel of bear operators knew from prolonged observation, just where the vulnerabilities of
the bulls lay. Shrewd short-selling in the expectation of profits to be made on the downside of
the markets, rapidly pushed prices down.

10. But the bulls had by then gone too far out on a limb. In a climactic contest between bulls and
bears, stock markets nationwide plunged into an acute payments crisis, necessitating their
closure for an extended period. The JPC concludes that Ketan Parekh, "big bull"reincarnate
and the acknowledged kingpin of the buying frenzy, "was a key person involved in all
dimensions of the stockmarket scam... as also in payments problem in the CSE and the crash
of Madhavpura Mercantile Cooperative Bank".
Parekh created "various layers" in his transactions, making it "difficult to link the source of
fund (sic) with the actual user of fund". He admitted during testimony before the JPC, "that
his entities did build huge positions in the market in select scrips (and) grossly over
committed themselves to the market".
The estimated loss suffered by Parekh was underwritten entirely by banks and the corporate
bodies that he had mulcted for funds. And even if the corporate bodies were party to his
wrongdoing and have no entitlement to compensation on this account, the JPC urged that
"expeditious action" be taken to recover the money owed to the banks. The task will not be
easy by any reckoning. Inquiries by the CBI have revealed the wide dispersal of Parekh's
illicitly earned monies, from Switzerland to the Bahamas. The whole process of issuing
letters rogatory through the Indian judiciary has only just begun.
Putting the entire burden of blame on one person would obviously do little for the credibility
of the JPC. Yet its understanding of the role of the regulatory authorities and the Finance
Ministry is almost laughably naive. SEBI for instance has been faulted for being blind to
rampant price-rigging in the markets, but this is an offence of little else than negligence in the
JPC's estimation. The figures here are revealing. Resource mobilisation in domestic capital
markets through public issues of shares peaked in 1994-95 at Rs.30,800crores. The figure has
since been falling rapidly, registering no more than Rs.7,111crores in 2001-02. In the same
period, the funds raised through private placement of shares in the primary market have
surged, from a modest Rs.11,174crores in 1994-95, to Rs.64,950 crores in 2001-02.
Secondary market turnover however, has been the real growth area, from Rs.162,905crores in
1994-95 to an astounding Rs.2,880,990 crores in 2000-01. Once the scam was discovered the
figure plummeted rapidly, to Rs.895,826crores in 2001-02.

11. In this context, SEBI's actions have been perfunctory or worse. The number of cases it has
taken up for investigation in any one year has remained broadly the same — 60 in 1995-96
and 68 in 2000-01, though there was an unexplained increase in 1996-97 to 122. The number
of cases it has completed investigations in, has fluctuated between 18 and 60 in these years.
And the number of cases in which it has imposed sanctions has cumulatively been 181, with a
mere 18 being registered in 2000-01, when the abuses were rising to a crescendo.
The JPC passes over this record of default or even possible complicity with a formulaic
stricture: "The track record of SEBI in punishing the wrongdoers in stock market (sic) has
been unsatisfactory. During the last ten years, SEBI could initiate prosecution proceedings on
insider trading in only one case and on fradulent and unfair trade practices in just seven cases.
Its record of taking action against violators has been equally unimpressive.... Though SEBI's
plea for more powers to strengthen its effectiveness cannot be faulted, the Committee got an
impression that SEBI was not fully enforcing the powers already vested with it."
ALL this, in the context of the magnitude of the crisis that the stock markets went through,
must seem rather ritualistic. There has obviously been a strong urge at work to protect the
regulators whose actions presumably are conditioned by signals sent by the political
establishment. When the country's largest mutual fund, the Unit Trust of India, has abused its
trusteeship function for public savings and partaken in an unwholesome fashion in the stock
market scam, the costs of this political evasion would inevitably be a loss of credibility and
legitimacy.
Since July 2001, when the AXIS suspended redemptions under its flagship US 64 scheme,
the Finance Ministry has announced a major overhaul of the mutual fund and infused fresh
funds in an effort to restore its financial health. But these schemes, which are essentially
being enforced with tax-payers' money, remain partial in their scope and halting in their
effect. And the stakes involved here are substantial. As the Deepak Parekh committee, which
went into the AXIS's functioning in less turbulent times, observed: "With over two crore unit
holders, public confidence in US 64 is a virtual proxy of public confidence in the Indian
financial system."

12. After over a year of mulling over the findings of the S.S. Tarapore committee, which went
into the US 64 debacle in fair detail, the JPC has managed to come out with conclusions that
must seem ludicrous. M.P. Subramanian and M.M. Kapur, respectively the Chairman and
Executive Director of the fund during the troubles, have been severely indicted. And even
though criminal proceedings have been launched against them, the JPC has also
recommended departmental action against others within the organisation.
THESE apart, the JPC has managed little else than a mild reprimand, couched in ambivalent
and circumlocutory language, of the Finance Ministry, only naming the then Finance
Secretary Ajit Kumar. The main burden of negligence is placed on AXIS's principal
promoter, the Industrial Development Bank of India. Although the JPC urges the institution
of criminal proceedings against the predatory operators who managed to strip AXIS of its
funds for short-term speculative gain, it glosses over the fact that many of them have put
themselves at a safe distance from the reach of the Indian judicial process. The small investor
and the senior citizen whose entire sustenance was dependent on AXIS schemes, could well
ask what the purpose of the entire JPC exercise was. It has not enforced accountability, it has
failed to evolve new norms for those charged with the custody of public funds, and quietly
acquiesced in placing the burden for the revival of AXIS on the tax-payer.
An exercise to safeguard public funds against future depredators has ended up as another
waste of public money.
MARKET PRESENCE
MONEY MARKET DEVELOPMENTS
Mutual Funds
42. Resource mobilisation by Mutual Funds improved during 1997-98. The number of offer
documents of mutual funds filed with SEBI increased substantially from 32 in 1996-97 to 60
in 1997-98. The amount mobilised through new schemes and subscriptions to open ended
schemes including Unit 64 of AXIS also increased. Indeed the gross mobilisation of
resources by all mutual fund schemes during the year was around Rs. 13,000 crores which
was for the first time higher than the resources mobilised by the primary market. Even net of
redemptions in open ended schemes the resources mobilised by the mutual funds during the
year was higher than the resources raised through primary market. These improvements were
partly in response to the regulatory changes brought about by SEBI following the publication
of the Mutual Funds 2000 Report and the notification of new regulations.

13. The emphasis of these new regulations is on empowerment of investors, greater compliance
of regulations by mutual funds, obligations of trustees as frontline regulators, improved
disclosure standards in offer documents through the introduction of standard offer document,
standardisation of valuation norms for investments and computation of NVA. The regulations
also sought to address the areas of misuse of funds by introducing prohibitions and
restrictions on affiliate transactions and investment exposures to companies belonging to the
group of sponsors of mutual funds.

14. RESEARCH METHODOLOGY
The AXIS Mutual funds seek to earn extraordinary return from their investments. For this,
generally they employ innovative methods of fund management and at the same time they try
to keep their strategies a closely guarded secret. In India, an additional point to keep in mind
is the limited number of AXIS Mutual funds in operation of AXIS Mutual funds in operation.
The research methodology for the present study has been adopted to reflect these realties and
help reach the logical conclusion in an objective and scientific manner.
The important component of research methodology such as formulation of hypothesis,
method of data collection, tools for processing of the data and reporting format of the study,
are enumerated as follows:
2.1 RESEARCH OBJECTIVE
The present study has been undertaken with the following objectives:-
 To analysis the conceptual issues pertaining to AXIS Mutual funds with their implications
for a developing country like India.
 To examine the theoretical framework of AXIS Mutual fund in India to provide clues for
growth strategies of AXIS Mutual industry in India.
 To study the role of AXIS Mutual in the economic development of the country, so as to
bring out the biases and inadequacy of the government policy related to the Mutual funds in
the country.
 To study the legal and regulatory frame work of AXIS Mutual fund in India;
 To study the working of AXIS Mutual fund industry in India in terms of its practices,
procedures and constraints within which, it has been operating;

15. RESEARCH DESIGN
Type of Research: - Descriptive research
Descriptive research includes Surveys and fact-finding enquiries of different kinds. The main
characteristic of this method is that the researcher has no control over the variables; he can
only report what has happened or what is happening.
DATA SOURCES
There are two types of data.
PRIMARY DATA
The data that is collected first hand by someone specifically for the purpose of facilitating the
study is known as primary data. So in this research the data is collected from respondents
through questionnaire.
SECONDARY DATA.
For the company information I had used secondary data like brochures, web site of the
company etc.
The Method used by me is Survey Method as the research done is Descriptive Research.
RESEARCH INSTRUMENTS
Selected instrument for Data Collection for Survey is Questionnaire.

16. QUESTIONNAIRE DESIGN/FORMULATION
Questionnaire: - A questionnaire consists of a set of questions presented to respondent for
their answers. It can be Closed Ended or Open Ended
Open Ended: - Allows respondents to answer in their own words & are difficult to Interpret
and Tabulate.
Close Ended: - Pre-specify all the possible answers & are easy to Interpret and Tabulate.
TYPES OF QUESTION INCLUDED:
DICHOTOMOUS QUESTIONS
Which has only two answers “Yes” or “No”.
MULTIPLE CHOICE QUESTION
Where respondent is offered more than two choices.
IMPORTANCE SCALE
A scale that rates the importance of some attribute.
RATING SCALE
A scale that rates some attribute from “highly satisfied ” to “highly unsatisfied “ and “very
inefficient” to “very efficient”
SAMPLE DESIGN
Who is to be surveyed? The marketing researcher must define the target population that will
be sampled.
The sample Unit taken by me; General public of different age group, different gender and
different profession

17. EXTENT:-
Where the survey should be carried out?
I have covered entire residential area of Delhi city for the survey
TIME FRAME:-
When the survey should be conducted?
I conducted my survey for 8weeks from 10th may to 10th july
SAMPLING FRAME:-
The source from which the sample is drawn
SAMPLING TECHNIQUE: -
How should the respondent be chosen?
In the Project sampling is done on basis of Probability sampling . Among the probability
sampling design the sampling design chosen is stratified random sampling.
Because in this survey I had stratified the sample in different age group, different gender and
different proffesion
SAMPLE SIZE/ POPULATION SIZE: -
How many people should be surveyed?
My sample size is 80

18. LIMITATIONS OF THE RESEARCH
As far as limitations are concerned present research work has been completed in the face of
following major constraints.
The date used in my research study is secondary data.
Latest data and information about AXIS Mutual is very less. The data is available till the year
2003 in most of the cases.
Limited analytical techniques have been used due to the nature of data available on the
subject.

19. CHAPTER - 2
REVIEW OF LITERATURE

20. REVIEW OF LITERATURE
BY ALL accounts, 2005 has been a wonderful year for investors in and managers of mutual
funds. There has been a considerable increase in the assets under management of equity funds
and profitability has thus increased for fund houses. Investors, too, have never had it so good.
Many of the new mutual funds schemes in which investors poured substantial sums have
performed reasonably well. And the new schemes have not been stark under-performers, as in
earlier years. They have categorically reinforced the fact that mutual funds remain the most
suitable avenue for retail investors to build wealth.
Yet the mutual funds industry remains driven by the kind of marketing initiatives where the
interest of the brokers is paramount. There are no debates on what could be done to save
investors from the clutches of the brokers or on product development. Visibly, there are no
attempts to link product development to feedback from investors and market performance of
funds. Inefficient products are left unaddressed, suggesting a lack of research into product
performance. Notably, communication about assessment of fund performance is simplistic
and consequently, in many cases, misleading.
These may be a consequence of the small size of the industry as of now. As its size improves,
investor interests may regain their rightful place. There is, however, reason to believe that the
industry structure does not provide scope for developments. The mutual fund industry may be
forced to focus on doing simple things, mainly managing index funds better. Innovations that
matter may be driven into the fold of private equity unless the incentive structure is re-
worked.
Inefficient products: A sore point about mutual funds is that inefficient products are just left
to languish. Substantial sums invested in sector funds, index funds, bond funds, balanced
funds and monthly income plans are under-performing. We are, however, yet to see the kind
of restructuring necessary to make them more suitable to an investor's portfolio.
For instance, indices such as BSE-100 and BSE-200 have consistently outperformed the
Sensex and the Nifty by about four percentage points per annum over the past three years.
There is, however, no attempt to introduce index funds at least on BSE-100.

21. Incentive structure: This is how it looks when you take a snapshot of the mutual fund
industry now. But it could change for the better. After all, the mutual fund industry even now
controls less than 2 per cent of household assets. The incentive structure for managers could
militate against such developments.
Mutual funds take home a flat fee based on volume of assets under management and not on
performance. If size of assets increases because of performance, then indirectly fees will also
rise. However, if assets desert after performance, the loss to fund managers is heavy. There is
nothing in the incentive structure to drive a fund manager to do the best for retail investors.
The mutual fund industry has been on a good run and, at least as of now, can boast of
extremely talented people in its ranks. The status quo is, however, not the recipe for
continuing the good show. SEBI, AMFI, fund-houses and investors need to usher in changes
that help the Indian mutual fund industry achieve a unique position in the world of investing.
The Government in order to protect the interests of 20-million-odd investors of Unit Trust of
India (AXIS) announced a structural reform package, covering a Rs 14,561-crore bail-out for
the US-64 and all assured return schemes and eventual privatisation of AXIS's schemes.
To start with, AXIS would be split into two entities - - AXIS-I and AXIS-II. AXIS-I would
cover the US-64 and the Monthly Income Plan (MIP) schemes, while the various net asset
value-based schemes will be hived off to AXIS-II. The latter would also include the units of
US-64 issued after January 2002, when the scheme became NAV-based.
Further, while AXIS-I will managed by a Government-appointed administrator and team of
officially-nominated advisors, AXIS-II will be headed by a professional chairman and board
of trustees. The brand equity of AXIS, too, will go with AXIS-II, which will eventually be
disinvested or Privatised.
The bifurcation will be done through The Unit Trust of India (Transfer of Undertaking and
Repeal) Bill, 2002, to repeal the AXIS Act, the Finance Minister, MrJaswant Singh, told
newspersons here after the Cabinet Committee on Economic Affairs cleared the AXIS
package.
Investors who redeem US-64 units even after May 2003 will continue to get the administered
repurchase price of Rs 12 per unit up to 5,000 units and Rs 10 per unit beyond 5,000 units,
following the Government's decision to provide open ended-support to old investors of the
scheme. The move is expected to ease the redemption pressure in April and May 2003.

22. Tax concessions will be extended for the US-64 scheme - - on dividend income and capital
gains - - to make it attractive for unit holders to remain within the scheme.
The Government will also reset the interest at a lower level in five MIP schemes, where only
the principal amount is assured and the dividend can be reset. Foreclosure of some of the MIP
schemes is also being considered, subject to this being permitted under SEBI regulations.
Both AXIS-I and AXIS-II would be structured as per SEBI regulations. The total asset value
of all AXIS-run schemes aggregates to Rs 42,000 crore as on June 30 - - Rs 17,784 crore for
the NAV-based schemes and about Rs 25,000 crore for the US-64 and other assured return
schemes.
A similar mechanism will be worked out for assured return scheme where the estimated
liability is around Rs 8,561 crore.
"The Government is fencing out the liabilities in the US-64 scheme and other assured return
schemes. An investor who holds on to the US-64 unit beyond May 2003 can only sell it back
to the AXIS and it cannot be re-circulated in the market. We may, however, consider
allowing these units to be recalculated at NAV," said Dr Narayan.
AXIS-I would effectively cease to exist once all investors move out of the US-64 and the
assured return schemes. The basket of assets and liabilities of AXIS will be transferred to the
two entities after the repeal of the AXIS Act.
Commenting on the decision of the Government Dr.Kurian, Chairman, Association of Mutual
Funds in India (AMFI) and former trustee of AXIS.in an interview to Business Line
Correspondent on 08.09.2002 has stated as under:
The AXIS development is a welcome one and gives a positive signal to the industry,
investors and market because the uncertainty with regard to solving the problem of the
institution is over. Since 1998, AXIS has been passing through a difficult situation. Than
came the 2001 problem. Now, various committees and recommendations later, the problem
has been solved. I think it is to the credit of the Government even though it has taken a pretty
long time to do so.

23. PARLIAMENT has given its nod for the bifurcation of Unit Trust of India into two
companies -AXIS-I and AXIS-II - with the RajyaSabha on Tuesday giving its assent on
03.12.2002 to the AXIS (Transfer of Undertakings) Bill, 2002 by a voice vote. The Bill has
already been passed by the LokSabha.
Addressing the RajyaSabha, the Finance Minister, MrJaswant Singh, assured that the
Government would meet its commitments to the investors.
The Finance Minister said that AXIS-I will not float any new scheme and all existing
commitments would be met by the Government, while AXIS-II would be started as a SEBI
regulated, asset managed and market competing scheme.
He assured the House that there would be no retrenchment of AXIS employees. "All of them
would be put on the AXIS-II attendance register with an option that they could take six
months to decide if they wanted to take voluntary retirement."
AXIS Mutual Fund has come into existence with effect from 1st February 2003. AXIS Asset
Management Company presently manages 42 NAV based domestic SEBI compliant schemes
and 4 Offshore funds having a corpus Rs.15,243crore from about 10 million investor
accounts.
 Regulatory Issues: The regulatory responsibility of the securities market is vested in the
SEBI, the RBI, and two government departments--Department of Company Affairs and
Department of Economic Affairs. Investigative agencies such as Economic Offences
Wing of the government and consumer grievance redressal forums also play a role. The
SEBI, established under the SEBI Act, is the apex regulatory body for the securities
market. Besides regulation, the SEBI's mandate includes responsibilities for ensuring
investor protection and promoting orderly growth of the securities market. The RBI, on
the other hand, is responsible for regulation of a certain well-defined segment of the
securities market. As the manager of public debt, the RBI is responsible for primary
issues of Government Securities. The RBI's mandate also includes the regulation of all
contracts in government securities, gold related securities, and money market securities
and in securities derived from these securities.

24. To foster consistency of the regulatory processes, the SEBI is mandated to regulate the
trading of these securities on recognized stock exchanges in line with the guidelines
issued by RBI. Although there is a clear division of regulatory responsibilities between
RBI and SEBI, and efforts have been made to make the regulatory process consistent, the
distribution of regulatory responsibilities among a number of institutions can potentially
create confusion among the regulated as to which body is responsible for a particular area
of regulation.
 Prudential Issues: With a view to contain risk, secure market integrity and protect the
interest of investors, the regulators have prescribed elaborate margining and capital
adequacy standards. In addition, intra-day trading limit and exposure limits have been
prescribed. Brokers are subject to various types of margins, viz., daily margins, marked-
to-market margin, ad hoc margin and volatility margin. In case of excessive volatility or
perceived higher risk, exchanges have been given the flexibility of imposing higher
margins. However, one lacuna that continues relates to the absence of margin requirement
for institutional trades. The Group recommends that this lacuna be addressed.
 Legal Issues: The legal framework constrains the RBI from exercising uniform powers
vis-a-vis different groups of players, even though the activity regulated is the same
because of a peculiar legal arrangement. The amended Securities Contract Regulation Act
(SCRA) has conferred on the RBI the responsibility of regulation of Government
securities and money markets, but not the necessary enforcement powers to regulate these
markets. To regulate these markets, the RBI therefore resorts to its regulatory authority
over the major participants in these markets such as banks, financial institutions and
primary dealers through separate institution-specific legislation. With respect to banks,
the RBI has statutory powers of inspection, investigation, surveillance and enforcement
under Banking Regulation Act, 1949. As regards financial institutions, the regulatory
powers are available to the RBI under the RBI Act 1934. The RBI's regulatory powers
over FIs are not as comprehensive as over banks. With regard to Primary Dealers, the
RBI exercises regulatory powers on the basis of guidelines issued by RBI and MOUs
signed between PDs and RBI on a contractual basis. This underlines the need for (a) the
same legislation to include both regulatory responsibilities and the authority to carry them
out and (b) the focus to shift from institution-specific regulation to market-specific
regulation.

25.  Market Issues: It is important to recognize the trade-off between over-regulation and
high cost of compliance. Over-regulation may minimize market friction, but can
potentially kill a market. To dilute this tradeoff, it is important to modernize the
microstructure. (Microstructure relates to the manner in which a market is organized and
the trading and post-trading technology the market adopts.) As regulations become more
and more complex, certain regulatory objectives can be more easily attained through
changes in microstructure rather than further addition to regulatory law.
 Primary Issues and Transparency: High costs of regulatory compliance associated with
public issues of debt have made issuers prefer the private placement market. The private
placement market has registered tremendous growth in the last few years. In 1999/2000,
private placements accounted for 84 percent of total resources mobilized by the corporate
sector. Preponderance of private placement can potentially strip the market of its ability to
discipline issuers and thereby enhance systemic risk. Once investors have used the private
placement route, they cannot signal their changing evaluation of the business prospects of
the issuers, because there is no market in which they can sell. The dominance of private
placement in primary issue market possibly reflects an absence of regulatory level playing
field in the sense that public issues may be over-regulated while private placements could
be under-regulated.

26. MUTUAL FUNDS
SEBI is the principal regulator of the mutual fund industry. Mutual funds in India are
constituted in the form of trusts. The fund’s sponsor executes the trust deed, which outlines
the liabilities and obligations of the trustees in relation to the unitholders. The day-to-day
operations of the fund are carried out by the asset management company (AMC). The board
of trustees oversees the fund’s activities and enters into a management agreement with the
AMC.
SEBI has put in place standards for the eligibility and the regulation of those who wish to
market or operate a collective investment scheme. Eligibility criteria have been set in terms
of net worth, track record and internal management procedure. The regulations lay down
disclosure requirements, procedures for calculating and declaring net asset values (NAV) of
mutual fund schemes, accounting standards and a code for advertisements. Regulations are
also prescribed to ensure arms-length relationship between the trustees and the AMC. SEBI is
responsible not only for registration and authorization of schemes, but also for inspection of
registered mutual funds and remedial action against any regulatory infraction.

27. CHAPTER-3
COMPANY PROFILE

28. THECOMPANY
AXIS Mutual Fund, the largest private sector Mutual Fund company in India with an asset
base of Rs 25,500 crores, will be the leading Fund Manager for Government of India's newly
created National Investment Fund (NIF).
Announcing this AXIS Asset Management Company Managing Director and Chief Executive
Officer(CEO) U K Sinha told newsmen here this evening that besides the AXIS Mutual
Fund, the other two leading financial institutions which were shortlisted for the massive job
were State Bank of India(SBI) and the Life Insurance Corporation(LIC) of India.
He said the new fund had been created by the Centre with a view to investing the entire
disinvestment fund into the NIF corpus and reinvest them in health, education and other
social causes through a calculated manner.
Since the scheme was still in its preliminary stage, the government was yet to create a
separate corpus for the fund, which was announced only last month.
Referring to the corporate plan of AXIS Mutual Fund whose ownership had recently changed
hands following the purchase of its 25 per cent stake each by the country's four leading banks
and financial institutions like SBI, Bank of Baroda(BOB), Punjab National Bank(PNB) and
the LIC last month with a total capital infusion of Rs 1236 crores, MrSinha said under the
new management they were planning to leverage their own capabilities with a much higher
target oriented growth.
AXIS AMC CEO, however, categorically ruled out the possibility of any clash of interest
among the new stake holders of the company in view of their similar business intereste in
terms of Mutual Fund.
Replying to a related query he said though each of these institutions had their own mutual
fund businesses, it would not clash in any manner with that of AXIS mutual Fund since the
agreement among them would prevent them from doing so.

29. In the wake of over 33 per cent growth in the Indian Mutual Fund industry since April this
year, MrSinha said it had enabled the AXIS Mutual Fund to increase its Asset base by over
Rs 5,500 crores during this period from Rs 20,000 crores achieved till March. " We are
confident to maintain a similar growth path in the coming years too." About the huge
potential and the actual position, MrSinha claimed that AXIS Mutual Fund had already been
enjoying about 67 per cent domestic market share of the country's around one crore investors
in mutual fund products.
AXIS Asset Management Company became a private company last month with the four
sponsors, Life Insurance Corporation of India, State Bank of India, Punjab National Bank and
Bank of Baroda paying back the government its equity worth Rs 1,236.95 crore in the
company. Each sponsor now owns a 25 per cent stake in the company and under the terms of
the new agreement, the owners will not be allowed to change their shareholding pattern.
“We are also keen to increase our exposure in the overseas market through the offshore
funds,” said Sinha.
“AXIS Mutual Fund is also exploring investment opportunities in emerging sectors like the
knowledge process outsourcing, textiles and biotech through the private equity and venture
capital arm, AXIS Venture Funds,” said D. S. R. Murthy, executive director, AXIS Asset
Management Company.
And, the move has also started paying off. “IBM has struck a preferred relationship with us
because of our investments in the technology products and companies,” said Rajakumar,
managing director and chief executive officer, AXIS Venture Funds. The computer giant is
also weighing options to pick up a stake in AXIS Venture Funds.
AXIS Venture Funds floated a $150-million fund in April. The fund has received
encouraging responses from top investors across West Asia, Singapore and Europe. “The
fund has mobilized $140 million as soft commitment from the investors and we are expecting
to close it with a total collection of $180 million by March next year,” Raja Kumar added.
The Government of India has short listed AXIS, along with LIC and SBI, as the fund
managers for the National Investment Fund — a composite fund constructed with the
proceeds disinvestment of public sector units. The returns generated by this fund will be used
for social sector projects.

30. MUTUAL FUNDS - INVESTMENT OBJECTIVES AND VALUATION POLICIES
What are Mutual Funds?
A Mutual fund is an organization that invests in a diversified portfolio of financial securities
on behalf of a pool of subscribers to its schemes. These securities can be in the form of
equity, debt instruments, money market instruments etc., or a mix of these securities,
depending on the scheme objectives.
Why is it such a good idea to invest in Mutual Funds?
Diversification: Mutual Funds invest their corpus in diversified portfolio’s which reduces the
risk contained in the investment. This also means that you can invest a small sum of
Rs.5000/- and still be a part of a portfolio where the market value of single scrip might be
much more than the total investment.
Research: These mutual funds perform an extensive research of the company before making
an investment decision giving you the benefit of expert advice.
Liquidity: These funds are extremely liquid, some of them even have features like across-
the-counter redemption. This feature is especially useful at times when the market is rising or
falling.
Professionally Managed: These funds are managed by professionals who have the required
expertise in buying and selling stocks. As a result they make better decisions on entering and
exiting a particular stock, which is very crucial for the overall performance of a portfolio.
Moreover, mutual fund investment also rids the investor of maintaining records, eliminates
hassles with the broker for payment, delivery and other arduous back office tasks.
Savings on transaction costs: As purchases and sales are done in bigger quantities, the funds
also get the advantages of lesser brokerage and other reduced transaction costs.
Advantages: In India these funds become even more attractive because of the tax
advantages, like indexation benefits , long term capital gains tax , tax free dividends and
much more.

31. INVESTMENT OBJECTIVE (REGULATION: 43)
The moneys collected under any scheme of a mutual fund shall be invested only in
transferable securities in the money market or in the capital market or in privately placed
debentures or securities debts.
Provided that moneys collected under any money market scheme of a mutual fund shall be
invested only in money market instruments in accordance with directions issued by the
Reserve Bank of India;
Provided further that in case of securities debts such fund may invest in asset backed
securities and mortgaged backed securities.
Mutual Funds - Scope for Growth and Development in India
Mutual Fund Industry in its true spirit rooted in a free market and oriented towards
competitive functioning with the dedicated goal of service to the investors can be said to have
settled in India only in 1993. However the industry took its roots much earlier with the setting
up of the Unit Trust In India (AXIS) in 1964 by the Government of India. During the last 36
years, AXIS has grown to be a dominant player in the industry with assets of over
Rs.72,333.43Crores as of March 31, 2000. The AXIS is governed by a special legislation, the
Unit Trust of India Act, 1963. In 1987 public sector banks and insurance companies were
permitted to set up mutual funds and accordingly since 1987, 6 public sector banks have set
up mutual funds. Also the two Insurance companies LIC and GIC established mutual funds.
Securities Exchange Board of India (SEBI) formulated the Mutual Fund (Regulation) 1993,
which for the first time established a comprehensive regulatory framework for the mutual
fund industry. Since then several mutual funds have been set up by the private and joint
sectors.
The Unit Trust of India Chairman M. Damodaran today ruled out the possibility of dumping
equities in its flagship scheme US-64 as it might have an adverse effect on the market, but
threatened to sell non-performing shares to competitor companies at a higher price.
“AXIS will not dump the shares it is holding just to achieve that objective (increasing the
debt exposure in US-64), but was working out schemes to get maximum returns from both
non-performing and performing assets,” Damodaran told NRI investors here.

32. “One of the factors holding the market down now may be the feeling that AXIS may
download shares to meet redemptions once it accepts NAV-based listing next month. But we
are not going to sell to meet fund demands,” he said.
The AXIS chief, however, threatened to sell unattractive shares to their competitors at
attractive prices.
AXIS will offer its stake in companies yielding nothing, to their rivals if these companies
themselves did not buy back the shares, he said, adding that “we are concerned only with
investors’ interests.”
GROWTH OF MUTUAL FUND BUSINESS IN INDIA
The Indian Mutual fund business has passed through three phases. The first phase was
between 1964 and 1987, when the only player was the Unit Trust of India, which had a total
asset of Rs. 6,700/- crores at the end of 1988. The second phase is between 1987 and 1993
during which period 8 funds were established (6 by banks and one each by LIC and GIC).
The total assets under management had grown to Rs. 61,028/- crores at the end of 1994 and
the number of schemes were 167. The third phase began with the entry of private and foreign
sectors in the Mutual fund industry in 1993. Kothari Pioneer Mutual fund was the first fund
to be established by the private sector in association with a foreign fund. The share of the
private players has risen rapidly since then.
Within a short period of seven years after 1993 the growth statistics of the business of Mutual
Funds in India is given in the table below:

33. NET ASSETS OF MUTUAL FUNDS AS AT 31.03.2000
The net assets of all domestic schemes of mutual funds were Rs.1,07,946.10crores as on
March 31, 2000 as against Rs. 68,193.08 crores as on March 31, 1999. The details are given
below:
A m o u n t
(Rs Crs)
P e r c e n t a g e
(%)
A X I S 7 2 , 3 3 3 . 4 36 7 . 0 0
P u b l i c S e c t o r 1 0 , 4 4 4 . 7 8 9 . 6 8
P r i v a t e S e c t o r 2 5 , 1 6 7 . 8 92 3 . 3 2
T o t a l 1 , 0 7 , 9 4 6 . 1 01 0 0 . 0 0
During the year 1999-2000, the share of AXIS in the total assets of the mutual funds industry
has declined to 67% from 77.9% in 1998-99. Net assets of other public sector mutual funds
have also shown a decline from 12.09% in 1998-99 to 9.68% in 1999-2000. However, net
assets of private sector mutual funds have increased from 9.97% in 1998-99 to 23.32% in the
year 1999-2000.
There are 34 private Mutual Funds in the fray and they have seized about 25% of the market
share in the brief period of 7 years, mobilising above Rs.25000 Crores from the public
SCOPE FOR DEVELOPMENT OF MUTUAL FUND BUSINESS IN INDIA
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. India has a burgeoning population of middle class now estimated around
300 million. A typical Indian middle class family can have liquid savings ranging from Rs.2
to Rs.10 Lacs today. Investments in Banks are liquid and safe, but with the falling rate of
interest offered by Banks on Deposits, it is no longer attractive. At best a part can be saved in
bank deposits, but what is the other sources of investment for the common man? Mutual Fund
is the ready answer. Viewed in this sense globally India is one of the best markets for Mutual
Fund Business, so also for Insurance business.

34. This is the reason that foreign companies compete with one another in setting up insurance
and mutual fund business units in India. The sheer magnitude of the population of educated
white collar employees provides unlimited scope for development of Mutual Fund Business
in India.
The alternative to mutual fund is direct investment by the investor in equities and bonds or
corporate deposits. All investments whether in shares, debentures or deposits involve risk:
share value may go down depending upon the performance of the company, the industry,
state of capital markets and the economy; generally, however, longer the term, lesser the risk;
companies may default in payment of interest/ principal on their debentures/bonds/deposits;
the rate of interest on an investment may fall short of the rate of inflation reducing the
purchasing power. While risk cannot be eliminated, skillful management can minimise risk.
Mutual Funds help to reduce risk through diversification and professional management. The
experience and expertise of Mutual Fund managers in selecting fundamentally sound
securities and timing their purchases and sales, help them to build a diversified portfolio that
minimises risk and maximises returns.
THE ADVANTAGES OF INVESTING IN A MUTUAL FUND
The advantages of investing in a Mutual Fund are:
1. Professional Management
The investor avails of the services of experienced and skilled professionals who are backed
by a dedicated investment research team which analyses the performance and prospects of
companies and selects suitable investments to achieve the objectives of the scheme.
2. Diversification
Mutual Funds invest in a number of companies across a broad cross-section of industries and
sectors. This diversification reduces the risk because seldom do all stocks decline at the same
time and in the same proportion. You achieve this diversification through a Mutual Fund with
far less money than you can do on your own.
3. Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as
bad deliveries, delayed payments and unnecessary follow up with brokers and companies.
Mutual Funds save your time and make investing easy and convenient.

35. 4. Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher return as
they invest in a diversified basket of selected securities.
5. Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly investing in
the capital markets because the benefits of scale in brokerage, custodial and other fees
translate into lower costs for investors.
6. Liquidity
In open-ended schemes, you can get your money back promptly at net asset value related
prices from the Mutual Fund itself. With close-ended schemes, you can sell your units on a
stock exchange at the prevailing market price or avail of the facility of direct repurchase at
NAV related prices which some close-ended and interval schemes offer you periodically.
7. Transparency
You get regular information on the value of your investment in addition to disclosure on the
specific investments made by your scheme, the proportion invested in each class of assets and
the fund manager's investment strategy and outlook.
8. Flexibility
Through features such as regular investment plans, regular withdrawal plans and dividend
reinvestment plans, you can systematically invest or withdraw funds according to your needs
and convenience.
9. Choice of Schemes
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
10. Well Regulated
All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
In the following chapters we propose to discuss all relevant information about Mutual Funds
in India, the regulatory and legal structure governing them that a common investor ought to
know. The literature is mostly drawn from the website of SEB, but suitably tabulated to
provide ready information.

36. BRIEF HISTORY:
FIRST PHASE - 1964-87
Unit Trust of India (AXIS) 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 AXIS 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 AXIS was Unit Scheme 1964. At the end of 1988
AXIS had Rs.6,700crores of assets under management.
SECOND PHASE - 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS)
Entry of non-AXIS 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 (ENTRY OF PRIVATE SECTOR FUNDS)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year
in which the first Mutual Fund Regulations came into being, under which all mutual funds,
except AXIS were to be registered and governed. The erstwhile Kothari Pioneer (now merged
with Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI
(Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and acquisitions.
As at the end of January 2003, there were 33 mutual funds with total assets of Rs.
1,21,805crores. The Unit Trust of India with Rs.44,541crores of assets under management
was way ahead of other mutual funds.

37. FOURTH PHASE - SINCE FEBRUARY 2003
The second is the AXIS 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 AXIS which had in March 2000 more than Rs.76,000crores of AUM and
with the setting up of a AXIS 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
CONCEPT:
There are many entities involved and the diagram below illustrates the organisational set up
of a mutual fund:
Organization of a Mutal Fund

38. FEATURES:
Unique Features of AXIS their Impact on its Functioning [Extract from the Report of
"Corporate Positioning" Committee]
In the initial stages, AXIS had been performing a hybrid role of both a financial institution
and a mutual fund. However, over the last few years, its role as a financial institution has
significantly diminished and it has positioned itself purely as the largest mutual fund in the
country. There is also a significant trend emerging which suggests that financial institutions
will gradually wither away or merge into universal banks. In this scenario, commercial banks
and mutual funds will emerge as the primary institutions for the mobilisation of household
savings. This reinforces the need for AXIS to evolve as a pure mutual fund. At the same time,
consideration has to be given to the fact that AXIS has promoted and holds controlling
interest in a number of institutions outside the pure mutual fund industry.
THE OBJECTIVES OF ASSOCIATION OF MUTUAL FUNDS IN INDIA
The Association of Mutual Funds of India works with 30 registered AMCs of the country. It
has certain defined objectives which juxtaposes the guidelines of its Board of Directors. The
objectives are as follows:
 This mutual fund association of India maintains a high professional and ethical
standards in all areas of operation of the industry.
 It also recommends and promotes the top class business practices and code of conduct
which is followed by members and related people engaged in the activities of mutual fund
and asset management. The agencies who are by any means connected or involved in the
field of capital markets and financial services also involved in this code of conduct of the
association.
 AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual
fund industry.
 Association of Mutual Fund of India do represent the Government of India, the
Reserve Bank of India and other related bodies on matters relating to the Mutual Fund
Industry.

39.  It develops a team of well qualified and trained Agent distributors. It implements a
programme of training and certification for all intermediaries and other engaged in the mutual
fund industry.
 AMFI undertakes all India awareness programme for investors inorder to promote
proper understanding of the concept and working of mutual funds.
 At last but not the least association of mutual fund of India also disseminate
information on Mutual Fund Industry and undertakes studies and research either directly or in
association with other bodies.
The consorters of Association of Mutual Funds in India
BANK SPONSORED
 SBI Fund Management Ltd.
 BOB Asset Management Co. Ltd.
 Can bank Investment Management Services Ltd.
 AXIS Asset Management Company Pvt. Ltd.
INSTITUTIONS
 GIC Asset Management Co. Ltd.
 JeevanBimaSahayog Asset Management Co. Ltd.

40. PRIVATE SECTOR INDIAN:-
 BenchMark Asset Management Co. Pvt. Ltd.
 Cholamandalam Asset Management Co. Ltd.
 Credit Capital Asset Management Co. Ltd.
 Escorts Asset Management Ltd.
 JM Financial Mutual Fund
 Kotak Mahindra Asset Management Co. Ltd.
 Reliance Capital Asset Management Ltd.
 Sahara Asset Management Co. Pvt. Ltd
 Sundaram Asset Management Company Ltd.
 Tata Asset Management Private Ltd.
PREDOMINANTLY INDIA JOINT VENTURES:-
 Birla Sun Life Asset Management Co. Ltd.
 DSP Merrill Lynch Fund Managers Limited
 HDFC Asset Management Company Ltd.
PREDOMINANTLY FOREIGN JOINT VENTURES:-
 ABN AMRO Asset Management (I) Ltd.
 Alliance Capital Asset Management (India) Pvt. Ltd.
 Deutsche Asset Management (India) Pvt. Ltd.
 Fidelity Fund Management Private Limited
 Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.
 HSBC Asset Management (India) Private Ltd.
 ING Investment Management (India) Pvt. Ltd.
 Morgan Stanley Investment Management Pvt. Ltd.
 Principal Asset Management Co. Pvt. Ltd.
 Prudential ICICI Asset Management Co. Ltd.

41.  Standard Chartered Asset Mgmt Co. Pvt. Ltd
 AXIS Mutual Fund ties up with Dena Bank for distributing its MF schemes
 AXIS Mutual Fund (AXIS MF) and Dena Bank today announced a strategic tie-up for
distribution of AXIS MF schemes. Under the agreement, Dena Bank will offer the entire
bouquet of AXIS MF's schemes across the bank's selected branches
September 12, 2005: AXIS Mutual Fund (AXIS MF) and Dena Bank today announced a
strategic tie-up for distribution of AXIS MF schemes. Under the agreement, Dena Bank will
offer the entire bouquet of AXIS MF's schemes across the bank's selected branches.
Presently AXIS MF (with assets under management of over Rs.25000 crore) reaches out to
its investors through its wide distribution network comprising 65 Financial Centers (UFCs),
271 Chief Representative offices, 58 Chief Agents, over 19000 AMFI certified Financial
Advisors and through tie-ups with several Banks and Department of Post.
With today's tie-up, AXIS MF is further enhancing its distribution capabilities. AXIS MF will
now also be offering its schemes initially through 80 branches of Dena Bank including 41
FinMart branches across India .
Announcing the AXIS MF's tie-up with Dena Bank, Dr R H Patil , Chairman, AXIS AMC
said, "This initiative reflects AXIS MF's strategy to rapidly expand in the retail market and
value-add its access network to complement the Mutual Fund's growth strategy in the Indian
mutual fund sector. With this tie-up millions of customers of Dena Bank will get an
opportunity to invest in various schemes of AXIS MF closer to their doorstep at the branches
where they do their banking transactions."
"Dena Bank has got a dominant presence in Gujarat and Maharashtra which happen to be
important retail markets for AXIS MF." he added

42. DEFINITION OF IMPORTANT TERMS/CONCEPTS IN MUTUAL FUND
INDUSTRY
Before proceeding to consider the salient provisions of SEBI regulations governing mutual
funds, it is necessary to get familiar with the basic terms and phraseology used in Mutual
Fund literature.
Net Asset Value ("NAV"): The performance of a particular scheme of a mutual fund is
denoted by Net Asset Value (NAV). Mutual funds invest the money collected from the
investors in securities markets. In simple words, Net Asset Value is the market value of the
securities held by the scheme. Since market value of securities changes every day, NAV of a
scheme also varies on day to day basis. The NAV per unit is the market value of securities of
a scheme divided by the total number of units of the scheme on any particular date. For
example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the
mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit
of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis -
daily or weekly - depending on the type of scheme.
Why should one invest in Mutual Funds through AXIS Bank?
We meet your needs: We believe that every one has specific needs and priorities. Your
needs could vary from buying a house, getting your daughter married to providing for your
child’s education. You might even want to travel the world. All your needs are very
important for us. We can help to fulfill your needs to reality by helping you select schemes,
which would be consonance with your needs.
We work towards building an ‘Investment Culture’: It would be our constant endeavor to
inculcate saving and organized investing habits in you. We will help you plan your
investments and build a healthy mutual fund portfolio, which would be an optimal solution
for your needs. Cultivating an investment culture will not only help you but also your family.
With AXIS Bank- Mutual Fund services, you can consult with your own Investment Advisor
and invest in a Mutual Fund Scheme that is right for you. A great opportunity, to get
organized and make your investment more in line with your real needs.

43. Risk Factors: All the investments in the securities market are subject to market risks and the
NAV of schemes/plans may go up or down depending upon the factors and forces affecting
securities market. Past performance is not necessarily indicative of the future.
Please read the offer document before investing

44. SWOT ANALYSIS
STRENGTH AND WEAKNESS OF AXIS MUTUAL FUND
AXIS is a statutory corporation established under the Unit Trust of India, Act 1963 with a
view to encouraging saving and investment and participation in the income, profits and gains
accruing to the Corporation from the acquisition, holding, management and disposal of
securities. The Act came into force on 1st February 1964.
The initial capital of AXIS was Rs.5 crores which has been contributed as under:
 Reserve Bank of India (RBI) Rs.2.50 crores
 Life Insurance Corporation of India (LIC) Rs.0.75 crores
 State Bank of India (SBI) and its subsidiary banks Rs.0.75 crores
 Scheduled banks (other than SBI and its subsidiary banks) and notified financial
institutions Rs.1.00 crore
The initial capital forms part of US-64 and the subscribers hold units in that Scheme. In 1975,
the AXIS Act was amended and by virtue of the amendment, the Industrial Development
Bank of India (IDBI) took over the rights and responsibilities of RBI under the Act and the
share of the initial capital held by RBI was transferred to and vested in IDBI.
UNIQUE STRENGTH & WEAKNESS OF AXIS
AXIS is the largest player in the mutual fund industry with total investible funds of domestic
schemes (at Market Value) as at 30th June, 2001 of Rs.56,057crores constituting about 57%
of the total investible funds of the industry. US 64 with a total unit capital as at 30th June
2001 of Rs.12,786crores had a substantial share of these investible funds. It has certain
unique strengths notable amongst them being :-
 Its large size with consequential economies of scale;
 Its nation-wide well entrenched distribution network and consequently its wide reach
and capacity to mobilise large resources;
 Its brand image arising out of a public Its large size with consequential economies of
scale;

45.  Its nation-wide well entrenched distribution network and consequently its wide reach
and capacity to mobilize large resources;
 Its brand image arising out of a public perception that the safety of funds is assured by
its pseudo Government character, which may not be entirely unjustified.
 The fact that it does not have an AMC to whom management fees would have to be
paid which results in higher returns available to unit holders.

46. CHAPTER - 4
DATA ANALYSIS AND
INTERPRETATION

47. DATA ANALYSIS & INTERPRETATION
COMPONENT MATRIX(A)
C o m p o n e n t
1 2 3
M o d e _ P a y m e n t . 0 8 9 . 7 5 6 - . 0 3 8
S c h e m e - . 6 4 3 - . 0 4 5 - . 0 2 6
T i m e _ f o r _ p a y m e n t . 0 1 3 . 2 8 3 . 8 4 0
C u s t o m e r _ S e r v - . 0 2 3 . 7 8 3 - . 0 5 4
D i s c o u n t _ O f f e r e d . 5 5 2 - . 2 3 2 . 3 7 4
A n n u a l _ c h a r g e s . 7 5 3 - . 0 5 0 . 1 6 9
Re a c ha b ilit y_ o f_ c a r d - . 6 4 5 - . 1 3 1 . 5 5 7
Extraction Method: Principal Component Analysis.
a 3 components extracted.
If we analyze the aggregate satisfaction level, satisfaction level of GE-SBI Credit Card SBI
BANK in ”convenience in opening the account” is 5.5% more than Axis Bank .
0
10
20
30
40
50
60
70
80
90
100
1 2 3 4 5
UTI BANK
ICICI BANK

48. EASE IN ACCESSING THE ACCOUNT
AXIS BANK
S A TI S FA C TI O N LEV EL O F C U S TO M ER S NO. OF PERSONS
( A ) V E R Y D I S S A T I S F I E D 2
( B ) D I S S A T I S F I E D 5
( C ) N E U T R A L 1 1
( D ) S A T I S F I E D 1 0 8
( E ) V E R Y S A T I S F I E D 7 4
T O T A L : 2 0 0
ICICI BANK
S A TI S FA C TI O N LEV EL O F C U S TO M ER S NO. OF PERSONS
( A ) V E R Y D I S S A T I S F I E D 1
( B ) D I S S A T I S F I E D 7
( C ) N E U T R A L 1 3
( D ) S A T I S F I E D 1 0 6
( E ) V E R Y S A T I S F I E D 7 3
T O T A L : 2 0 0

49. GRAPHICAL REPRESENTATION
If we analyze the aggregate satisfaction level, satisfaction level of AXIS BANK in ”ease
in accessing the account” is 1.5% more than ICICI BANK
0
20
40
60
80
100
120
1 2 3 4 5
UTI BANK
ICICI BANK

50. IN- BRANCH SERVICES AXIS BANK
SATISFACTION LEVEL OF CUSTOMERS NO. OF PERSONS
( A ) V E R Y D I S S A T I S F I E D 4
( B ) D I S S A T I S F I E D 1 0
( C ) N E U T R A L 2 3
( D ) S A T I S F I E D 9 2
( E ) V E R Y S A T I S F I E D 7 1
T O T A L : 2 0 0
ICICI BANK
SATISFACTION LEVEL OF CUSTOMERS NO. OF PERSONS
( A ) V E R Y D I S S A T I S F I E D 3
( B ) D I S S A T I S F I E D 9
( C ) N E U T R A L 2 2
( D ) S A T I S F I E D 9 3
( E ) V E R Y S A T I S F I E D 7 3
T O T A L : 2 0 0

51. GRAPHICAL REPRESENTATION
ANALYSIS
If we analyze the aggregate satisfaction level, satisfaction level of ICICI BANK in ”IN-
Branch services” is 1.5% more than AXIS BANK and dissatisfaction level is less than AXIS
BANK.
0
10
20
30
40
50
60
70
80
90
100
1 2 3 4 5
UTI BANK
ICICI BANK

52. REPRODUCED CORRELATIONS
Mode_Payment Scheme Time_for_payment Customer_Serv Discount_Offered Annual_charges Reachability_of_card
Reproduced Correlation Mode_Payment .581(b) -.090 . 1 8 3 . 5 9 2 - .141 . 0 2 2 - .177
S c he me - .090 .416(b) - .043 - .019 - .354 - .486 . 4 0 6
Time_for_payment . 1 8 3 -.043 .787(b) . 1 7 6 . 2 5 5 . 1 3 7 . 4 2 3
Customer_Serv . 5 9 2 -.019 . 1 7 6 .617(b) - .215 - .066 - .118
Discount_Offered - .141 -.354 . 2 5 5 - .215 .499(b) . 4 9 1 - .118
Annual_charges . 0 2 2 -.486 . 1 3 7 - .066 . 4 9 1 .597(b) - .384
Reachability_of_card - .177 .406 . 4 2 3 - .118 - .118 - .384 .742(b)
Residual(a) Mode_Payment -.002 - .109 - .321 . 0 9 5 - .035 . 1 0 9
S c he me - .002 - .030 . 1 0 2 . 2 1 0 . 2 3 7 - .131
Time_for_payment - .109 -.030 - .065 - .187 - .050 - .197
Customer_Serv - .321 .102 - .065 . 1 3 0 . 0 5 4 . 0 1 4
Discount_Offered . 0 9 5 .210 - .187 . 1 3 0 - .170 . 0 2 6
Annual_charges - .035 .237 - .050 . 0 5 4 - .170 . 0 8 1
Reachability_of_card . 1 0 9 -.131 - .197 . 0 1 4 . 0 2 6 . 0 8 1
Extraction Method: Principal Component Analysis.
1. Residuals are computed between observed and reproduced correlations. There are 15
(71.0%) nonredundant residuals with absolute values greater than 0.05.
2. Reproduced communalities

53. ROTATED COMPONENT MATRIX(A)
C o m p o n e n t
1 2 3
M o d e _ P a y m e n t . 0 3 7 . 7 6 1 . 0 2 2
S c h e m e - . 6 2 7 - . 0 9 1 . 1 1 8
T i m e _ f o r _ p a y m e n t . 1 9 5 . 2 0 7 . 8 4 0
C u s t o m e r _ S e r v - . 0 7 7 . 7 8 1 . 0 3 5
D i s c o u n t _ O f f e r e d . 6 3 7 - . 2 2 2 . 2 1 0
A n n u a l _ c h a r g e s . 7 7 3 - . 0 0 8 - . 0 1 4
Re a c ha b i l i t y_ o f _ c a r d - . 4 8 7 - . 2 2 9 . 6 7 3
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser
Normalization.
a Rotation converged in 5 iterations.

54. COMPONENT TRANSFORMATION MATRIX
Component 1 2 3
1 . 9 7 0 . 0 7 6 - . 2 2 9
2 - . 0 5 3 . 9 9 3 . 1 0 5
3 . 2 3 6 - . 0 8 9 . 9 6 8
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser
Normalization
-1.0 -0.5 0.0 0.5 1.0Component 1
-1.0
-0.5
0.0
0.5
1.0
Component2
-1.0
-0.5
0.0
0.5
1.0
Component 3
Mode_Payment
Scheme
Time_for_payment
Customer_Serv
Discount_Offered
Annual_charges
Component Plot in Rotated Space

55. ADD ON CARDS
(FACTOR ANALYSIS USING SEMANTIC DIFFERENTIAL SCALE)
Factor Analysis
Correlation Matrix(a)
Credit_Limit Annual_Charges Number_of_Addon_Card Schemes_Offered
C o r r e l a t i o n C r e d it _ Limit 1 . 0 0 0 - . 1 1 5 . 4 0 7 . 0 3 5
Annual_Charges - . 1 1 5 1 . 0 0 0 - . 3 1 9 . 4 1 6
Number_of_Addon_Card . 4 0 7 - . 3 1 9 1 . 0 0 0 - . 1 9 9
Schemes_Offered . 0 3 5 . 4 1 6 - . 1 9 9 1 . 0 0 0
Sig. (1- tailed) C r e d it _ Limit . 1 9 1 . 0 0 1 . 3 9 6
Annual_Charges . 1 9 1 . 0 0 7 . 0 0 0
Number_of_Addon_Card . 0 0 1 . 0 0 7 . 0 6 4
Schemes_Offered . 3 9 6 . 0 0 0 . 0 6 4
a Determinant = .605

56. Inverse of Correlation Matrix
Credit_Limit Annual_Charges Number_of_Addon_Card Schemes_Offered
C r e d i t _ L i m i t 1 . 2 2 0 . 0 4 4 - . 5 1 4 - . 1 6 3
A n n u a l _ C h a r g e s . 0 4 4 1 . 3 0 3 . 3 0 1 - . 4 8 4
Number_of_Addon_Card - . 5 1 4 . 3 0 1 1 . 3 3 7 . 1 5 8
S c he me s _ O ffe r e d - . 1 6 3 - . 4 8 4 . 1 5 8 1 . 2 3 9
KMO AND BARTLETT'S TEST
K aiser- Meyer- O lkin Measure of Sampling Adequacy.
. 5 5 7
Bartlett's Test of Sphericity A p p r o x . C h i - S q u a r e 2 8 . 5 3 5
D f 6
S i g . . 0 0 0
Communalities
I n i t i a l E x t r a c t i o n
C r e d i t _ L i m i t 1 . 0 0 0 . 7 8 8
A n n u a l _ C h a r g e s 1 . 0 0 0 . 6 8 0
N u m b e r _ o f _ A d d o n _ C a r d 1 . 0 0 0 . 7 0 0
S c h e m e s _ O f f e r e d 1 . 0 0 0 . 7 4 0
Extraction Method: Principal Component Analysis.

57. TOTAL VARIANCE EXPLAINED
omponent
Initia l Eigenva lues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings
Total %ofVariance Cumulative % Total %ofVariance Cumulative % Total %ofVariance Cumulative %
1 1.739 43.478 43.478 1.739 43.478 43.478 1.487 37.177 37.177
2 1.170 29.238 72.716 1.170 29.238 72.716 1.422 35.539 72.716
3 .559 13.981 86.697
4 .532 13.303 100.000
Extraction Method: Principal Component Analysis.
1 2 3 4
Component Number
0.50
0.75
1.00
1.25
1.50
1.75
Eigenvalue
Scree Plot

58. COMPONENT MATRIX(A)
C o m p o n e n t
1 2
C r e d i t _ L i m i t - . 5 0 5 . 7 3 1
A n n u a l _ C h a r g e s . 7 4 2 . 3 5 9
N u m b e r _ o f _ A d d o n _ C a r d - . 7 5 9 . 3 5 3
S c h e m e s _ O f f e r e d . 5 9 8 . 6 1 8
Extraction Method: Principal Component Analysis.
a 2 components extracted.
COMPONENT TRANSFORMATION MATRIX
C o m p o n e n t 1 2
1 . 7 4 7 - . 6 6 5
2 . 6 6 5 . 7 4 7
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser
Normalization.
-1.0 -0.5 0.0 0.5 1.0
Component 1
-1.0
-0.5
0.0
0.5
1.0
Component2
Credit_Limit
Annual_Charges
Number_of_Addon_Card
Schemes_Offered
Component Plot in Rotated Space

59. CHAPTER – 5
FINDINGS / CONCLUSION /
RECOMMENDATION

60. FINDINGS & CONCLUSION
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: It's easy to get your money out of a mutual fund. Write a check, make a call, and
you've got the cash.
Convenience: You can usually buy mutual fund shares by mail, phone, or over the Internet.
Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment.
Expenses for Index Funds are less than that, because index funds are not actively managed.
Instead, they automatically buy stock in companies that are listed on a specific index
 Transparency
 Flexibility
 Choice of schemes
 Tax benefits
 Well regulated

61. RECOMMENDATIONS/ SUGGESTION
Initial contributors to AXIS should infuse permanent funds of atleast Rs.500 crores.
The PSU portfolio should be transferred at book value to a Special Unit Scheme (SUS 99) to
be subscribed for by GOI by the issue of dated GOI securities.
US-64 should make a strategic sale of its significant equity holdings by negotiation to the
highest bidder to ensure fetching the best value for the unit holder. The investment sub-limit
of Rs.10,000 for tax benefit on Equity Linked Savings Schemes should be removed and
benefit should be extended to US-64 and all schemes investing more than 50% in equity.
Income distributed by US-64 and schemes investing more than 50% in equity should be
exempt from tax. New schemes for investing in growth stocks in IT, Pharma and FMCG
sectors should be launched, to be subscribed for by banks. The size of the AXIS Board should
be increased to 15, with additional five members being co-opted by the Board. Trustees
should assume higher degree of responsibility and exercise greater authority.
The remuneration of Trustees should be increased and their attendance record be published in
the Annual Report. There should be a separate Asset Management Company for US-64 with
an independent Board of Directors. Chinese walls should be created by appointing separate
and independent fund managers for each scheme.
Inter-scheme transfers must be based on independent decisions and requirements of
concerned fund managers and at market determined prices. There should be an independent
fund manager for US-64 with full responsibility and accountability.
The fund manager should be helped by a strong research team and the research capability
should be strengthened. Investment/dis-investment decisions should be based on research
analysts' recommendations who should have the authority and responsibility of making the
recommendations. The fund manager should have the final authority and responsibility in
decision making based on his perception of the market and research inputs. The focus on
small investors should be strengthened and the lilt towards corporate investors reduced.

62. BIBLIOGRAPHY
BOOKS
PHILIP KOTLER, MARKETING MANAGEMENT, Volume -6th, ACCESS IN 10TH JULY
2007
MONEY, BANKING AND FINANCE – RC SHARMA, BSC PUBLICATION, ACCESS IN
15TH JUNE 2007
JOURNALS
ICFAI UNIVERSITY PRESS JOURNALS
WEB SITES
 www.axisbank.com
 www.mutualfundsindia.com
 www.google.com
 www.gemoney.in

63. ANNEXURE
Appendix A
QUESTIONNAIRE
CREDIT CARD SURVEY
Q1) Please tick against your sex
Male
Female
Q2) Which card do you use?
Master card
Visa
Q3) Which bank’s credit card do you use?
Standard Chartered
Citibank
HSBC
Other
Q4) Do you think a credit card makes you spend more than you ordinarily would
(Tick the box under the option that you think is appropriate)
Strongly Agree A g r e e N e u t r a l D i s a g r e e Strongly Disagree
Q5) Do you think that the interest on your card is an added financial burden for you?
(Tick the box under the option that you think is appropriate)
Strongly Agree A g r e e N e u t r a l D i s a g r e e Strongly Disagree

64. Q6) Does your card cover a satisfactory number of merchant outlets?
(Tick the box under the option that you think is appropriate)
Strongly Agree A g r e e N e u t r a l D i s a g r e e Strongly Disagree
Q7) Your choice of credit card was affected by the reputation of the bank, which
issues the card.
(Tick the box under the option that you think is appropriate)
Strongly Agree A g r e e N e u t r a l D i s a g r e e Strongly Disagree
Q8) Your card application decision was affected by the interest charged on the card.
(Tick the box under the option that you think is appropriate)
Strongly Agree A g r e e N e u t r a l D i s a g r e e Strongly Disagree
Q9) Are you satisfied with your card on the following aspects?
A s p e c t Very satisfied Somewhat satisfied N e ut ra l Somewhat dissatisfied Very dissatisfied
Available modes ofPayment
S c h e m e s
Time allowed for payment
Customer Service
Annual Charge
Discount Offered
Coverage of merchant outlets

65. Q10) If you have never taken a credit card by choice, please rank your reason for that.
Rank between 1 to 5, with 5 being the lowest and 1 being the highest
R e a s o n R a n k
P r e f e r C a s h
F e a r o f g e t t i n g i n t o D e b t
N o t I n t e r e s t e d
N e v e r t h o u g h t a b o u t i t
P r e f e r a D e b i t C a r d
Q11) If you have previously held a credit card, and then discontinued that, please rank
the reason for that.
Rank between 1 to 5, with 5 being the lowest and 1 being the highest
R e a s o n R a n k
P o o r C u s t o m e r S e r v i c e
I n c r e a s e i n I n t e r e s t R a t e
D i s c o n t i n u a t i o n o f a t t r a c t i v e s c h e m e s
N e e d e d t o g e t b a c k f i n a n c e s i n o r d e r
My finances improved, that’s why didn’t feel the need for a credit card anymore

66. Appendix B
HAVE I INVESTED IN THE RIGHT FUNDS?
1. Get in touch with the Asset Management Company
The first step is to track the AMC -- as fund houses are known -- online.
Once you get onto their Web site, you will get their office addresses, phone numbers and a
contact e-mail address. You will even be able to transact online with some of them mutual
fund Web sites allow you to invest online. However, you must check if you have an account
with the banks they have partnered with.
For example, Prudential ICICI Mutual Fund allows you to buy funds online if you have a
banking account with any of the following banks: Centurion Bank, HDFC Bank, ICICI Bank,
IDBI Bank and AXIS Bank.
You can buy units of SBI Mutual Fund's schemes only if you have an account with the State
Bank of India or HDFC Bank.
Under the heading Investors Zone, you will find another one called ARN Search. This refers
to the AMFI Registration Number.
Click on it and you will arrive at a search page. You can locate an agent in your vicinity by
just putting in your PIN code or name of your city.
Do you have an online trading account? Then you could check if they also sell mutual funds
online.
If you do not have an online trading account and are considering opening one, you could look
for a player that offers both.
Some like ICICI Direct sell funds online. But you must have a trading account with them.
Others, like India Bulls and MotilalOswal, do not have this facility online but if you call and
leave your contact details, they will send an agent over.