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To study the investment

preference of investors in Fixed


Deposit with special reference of
Mahindra Finance

SUBMITTED BY:
PANKAJ MISHRA
PGDM (B&F)
APJ INSTITUTE OF TECHNOLOGY,
GREATER NOIDA

COMPANY SUPERVISOR: COLLEGE SUPERVISOR:


MR. TARUN SINGH MR. B. B. MISHRA
RELATIONSHIP MANAGER FACULTY
MAHINDRA FINANCE AIT, GREATER NOIDA
(1) Objective

(2) Theory and concepts

(a) Introduction

(b) Industry profile

(3) Company profile

(a) History

(b) Promoters

(c) Vision

(d) Products

(4) Research methodology

(a) Research plan

(b) Data collection

(5) Conclusion

(a) Analysis

(b) Interpretation

(c) Finding

(6) Recommendation and suggestion

(7) Bibliography

(8) Questionnaire
Financial market is one of the markets where there is lots of

option for the company. Mahindra Finance is a part of this

financial market which is pan India distributor of mutual

funds of all Asset Management Companies (AMC) in India. It

also intakes Fixed Deposits from the investor. Investor is the

important pillar of Financial Market who has power of money

to invest in the market. The objective of project “To study the

investment preference of investor in Fixed Deposit” was to analyze

the customer’s awareness, willingness and investment

preference towards financial investment schemes Mutual

Fund and Fixed Deposit with special focus towards Fixed

Deposit.
This project is about the investment preference of the customers in fixed deposit and
mutual fund. These are the investment instrument which bears comparatively low risk
and gives higher and sometimes moderate return. There are a large number of Banks and
other financial institutions which provide these investment facilities. In investors point of
view this report will be beneficial in terms of providing information that between these
instruments which investment will cover less risk of sinking of invested fund and
generate more return. In this study the analysis of various institutions has done which will
help the investor to stand on right choice. In company point of view this report will help
in terms of providing the information that how much population is aware about these
instruments and how many are interested in investment through these instruments.
Accordingly company can plan their promotional activities, promote their existing
schemes and plan their future products. This will help company to formulate new market
policies and launching new products in market. This will provide competitive benefit to
the company in market. This report includes the sufficient information about company,
existing products of company, performance of company and its products, relative
comparison of Mutual Fund and Fixed Deposit, relative comparison of investment
products of this company and other companies in the market. This report also includes
the recommendations and suggestions in order to increase marketing efficiency of the
company.
(A) Mutual fund
(1) Introduction-
The economic development model adopted by India in the post-independence era has
been characterized by mixed economy with the public sector playing a dominating role
and the activities in private industrial sector control measures emaciated from time to
time. The industrial policy resolution was introduced by the government in the 1948,
immediately after the independence. This outlined the approach to industrial growth and
development. The industrial policy statement of 1980 focussed attention on the need for
promoting competition in the domestic market, technological upgradation and
modernisation. A number of policy and procedural changes were introduced in 1985 and
1986, aimed at increasing productivity, reducing costs, improving quality, opening
domestic market to increase competition and making free the public sector from
constraints Overall, in the seventh plan period (1985-86 to 1989-90), Indian industries
grew by an impressive average annual rate of 8.5 percent. The last two decades have seen
a phenomenal expansion in the geographical coverage and financial spread of our
financial system. The spread of the banking system has been a major factor in promoting
financial intermediation in the economy and in the growth of financial savings. With
progressive liberalization of economic policies, there has been a rapid growth of capital
market, money market and financial services industry including merchant banking,
leasing and venture capital. Consistent with this evolution of the financial sector, the
mutual fund industry has also come to occupy an important place.
(2) Origin-
Mutual funds go back to the times of the Egyptians and Phonenicians when they sold
shares in caravans and vessels to spread the risk of these ventures. The foreign and
colonial government Trust of London of 1868 is considered to be the fore-runner of the
modern concept of mutual funds. The USA is, however, considered to be the mecca of
modern mutual funds. By the early - 1930s quite a large number of close - ended mutual
funds were in operation in the U.S.A. Much latter in 1954, the committee on finance for
the private sector recommended mobilisation of savings of the middle class investors
through unit trusts. Finally in July 1964, the concept took root in India when Unit Trust
of India was set up with the twin objective of mobilizing household savings and investing
the funds in the capital market for industrial growth. Household sector accounted for
about 80 percent of nation’s savings and only about one third of such savings was
available to the corporate sector; it was felt that UTI could be an effective vehicle for
channelising progressively larger shares of household savings to productive investments
in the corporate sector. The process of economic liberalization in the eighties not only
brought in dramatic changes in the environment for Indian industries, corporate sector
and the capital market but also led to the emergence of demand for newer financial
services such as issue management, corporate counselling, capital restructuring and loan
syndication. After two decades of UTI monopoly, recently some other public sector
organisations like LIC (1989), GIC (1991 ), SBI (1987), Can Bank (1987), Indian Bank
(1990), Bank of India (1990), Punjab National Bank (1990) have been permitted to set up
mutual funds. Mr. M.R. Mayya the Executive Director of Bombay Stock Exchange
opined recently that the decade of nineties will belong to mutual funds because the
ordinary investor does not have the time, experience and patience to take independent
investment decisions on his own.
(3) Importance of Mutual Fund-
Small investors face a lot of problems in the sharemarket, limited resources, lack of
professional advice, lack of information etc. Mutual funds have come as a much needed
help to these investors. It is a special type of institutional device or an investment vehicle
through which the investors pool their savings which are to be invested under the
guidance of a team of experts in wide variety of portfolio’s of Corporate securities in
such a way, so as to minimise risk, while ensuring safety and steady return on investment.
It forms an important part of the capital market, providing the benefits of a diversified
portfolio and expert fund management to a large number, particularly small investors.
Now a days, mutual fund is gaining its popularity due to the following reasons :
l. With the emphasis on increase in domestic savings and improvement in deployment of
investment through markets, the need and scope for mutual fund operation has increased
tremendously. The basic purpose of reforms in the financial sector was to enhance the
generation of domestic resources by reducing the dependence on outside funds. This calls
for a market based institution which can tap the vast potential of domestic savings and
chanalise them for profitable investments. Mutual funds are not only best suited for the
purpose but also capable of meeting this challenge.
2. An ordinary investor who applies for share in a public issue of any company is not
assured of any firm allotment. But mutual funds who subscribe to the capital issue made
by companies get firm allotment of shares. Mutual fund latter sell these shares in the
same market and to the Promoters of the company at a much higher price. Hence, mutual
fund creates the investors confidence.
3. The phyche of the typical Indian investor has been summed up by Mr. S.A. Dave,
Chairman of UTI, in three words; Yield, Liquidity and Security. The mutual funds, being
set up in the public sector, have given the impression of being as safe a conduit for
investment as bank deposits. Besides, the assured returns promised by them have
investors had great appeal for the typical Indian investor.
4. As mutual funds are managed by professionals, they are considered to have a better
knowledge of market behaviours. Besides, they bring a certain competence to their job.
They also maximise gains by proper selection and timing of investment.
5. Another important thing is that the dividends and capital gains are reinvested
automatically in mutual funds and hence are not fritted away. The automatic reinvestment
feature of a mutual fund is a form of forced saving and can make a big difference in the
long run.
6. The mutual fund operation provides a reasonable protection to investors. Besides,
presently all Schemes of mutual funds provide tax relief under Section 80 L of the
Income Tax Act and in addition, some schemes provide tax relief under Section 88 of the
Income Tax Act lead to the growth of importance of mutual fund in the minds of the
investors.
7. As mutual funds creates awareness among urban and rural middle class people about
the benefits of investment in capital market, through profitable and safe avenues, mutual
fund could be able to make up a large amount of the surplus funds available with these
people.
8. The mutual fund attracts foreign capital flow in the country and secures profitable
investment avenues abroad for domestic savings through the opening of off shore funds
in various foreign investors. Lastly another notable thing is that mutual funds are
controlled and regulated by S E B I and hence are considered safe. Due to all these
benefits the importance of mutual fund has been increasing.
(4) Schemes of Mutual Fund-
Within a short span of four to five years mutual fund operation has become an integral
part of the Indian financial scene and is poised for rapid growth in the near future. Today,
there are eight mutual funds operating various schemes tailored to meet the diversified
needs of savers. UTI has been able to register phenomenal growth in the mid eighties.
Now there are 121 mutual fund schemes are launched in India including UTI’s scheme
attracting over Rs. 45,000 Crores from more than 3 Crore investor’s accounts Out of this
closed-end scheme are offered by mutual fund of India to issue shares for a limited period
which are traded like any other security as the period and target amounts are definite
under such security as the period and target amounts are definite under such schemes.
Besides open-end schemes are lunched by mutual fund under which unlimited shares are
issued by investors but these shares are not traded by any stock exchange. However,
liquidity is provided by this scheme to the investors. In addition to this off shore mutual
funds have been launched by foreign banks, some Indian banks, like SBI, Canara Bank
etc, and UTI to facilitate movement of capital from cash-rich countries to potentially high
growth economics. Mutual funds established by leading public sector banks since 1987-
SBIMF, Can Bank, Ind Bank, PNBMF and BOIMF, emerged since 1987-SBIMFo, as
major players by offering bond like products with assurance of higher yields. The latest
schemes of BOI mutual fund goes to the extent of allowing each individual investor to
choose the date for receiving the income. Besides the bank mutual funds have also
floated a few open-ended schemes, pure growth schemes and tax saving schemes. The
LIC, GIC mutual funds offer insurance linked product providing various types of life and
general insurance benefits to the investors. Also the income growth oriented schemes are
operated by mutual fund to cater to an investor’s needs for regular incomes and hence, it
distributes dividend at intervals.
(5) Growth Trend of Mutual Fund-
Opening of the mutual fund industry to the public sector banks and insurance companies,
led to the launching of more and more of new schemes. The mutual fund industry in India
has grown fast in the recent period. The performance is encouraging especially because
the emphasis in India has been on individual investors rather in contrast to advanced
countries where mutual funds depend largely on institutional investors, In general, it
appears that the mutual fund in India have given a good account of themselves so far.
UTI's annual sale of units crossed Rs.1000 crores mark in 1986 to 87, 2000 crores mark
in 1987-88 and reached Rs.5500 crores mark in 1989 to 90. During 1990 to 91 on account
of decline of corporate interest sales declined to Rs.4100 crores though individual sales
increased over its preceeding year. LICMF has concentrated on funds which includes life
and accident cover. GICMF provide home insurance policy. The bank sponsored mutual
fund floated regular income, growth and tax incentives schemes. Together the eight
mutual fund service more than 15 million investors with UTI alone holds for 13 million
unit holding accounts. Magnum Regular Income Scheme 1987 assured a return of 12
percent but gave 20 percent dividend in 1993, UTI record 26 percent dividend for 1992 to
93 under the unit 1964 scheme. Magnum Tax saving scheme 1988 to 89 did not promise
any return but declared 14 percent dividend in 1993 and recorded a capital appreciation
of 15 percent in the first year. Equity oriented scheme have earned attractive returns.
Especially since early 1991 there has been a steady increase in the number of equity
oriented growth funds. With the boom of June 1990 and then again 1991 due to the
implementation of new economic policies towards structure of change the price of
securities in stock market appreciated considerably. The high rate of growth in equity
price led to a high rate of appreciation in the net asset value of the equity oriented funds
for which investors started changing their preferences from fixed income funds to growth
oriented or unfixed income funds. That is why more equity oriented mutual funds were
launched in 1991. Master share provide a respective dividend of 18 per cent in 1993, Can
share earned a dividend of 15 percent in 1993. In general the Unit Trust of India which
manages over 28,000 crore under various schemes has for its service an excellent
reputation.
(6) Short Commings in Operation of Mutual Fund-
The mutual fund has been operating for the last five to six years. Thus, it is too early to
evaluate its operations. However one should not lose sight to the fact that the formation
years of any institution is very important to evaluate as they could be able to know the
good or bad systems get evolved around this time. Following are some of the
shortcomings in operation of mutual fund.
1. The mutual funds are externally managed. They do not have employees of their own.
Also there is no specific law to supervise the mutual funds in India. There are multiple
regulations. While UTI is governed by its own regulations, the banks are supervised by
Reserved Bank of India, the Central Government and insurance company mutual
regulations funds are regulated by Central Government
2. At present, the investors in India prefer to invest in mutual fund as a substitute of fixed
deposits in Banks, About 75 percent of the investors are not willing to invest in mutual
funds unless there was a promise of a minimum return,
3. Sponsorship of mutual funds has a bearing on the integrity and efficiency of fund
management which are key to establishing investor's confidence. So far, only public
sector sponsorship or ownership of mutual fund organisations had taken care of this need.
4. Unrestrained fund rising by schemes without adequate supply of scrips can create
severe imbalance in the market and exacerbate the distortions.
5. Many small companies did very well last year, by schemes without adequate
imbalance in the market but mutual funds can not reap their benefits because they are not
allowed to invest in smaller companies. Not only this, a mutual fund is allowed to hold
only a fixed maximum percentage of shares in a particular industry.
6. The mutual fund in India are formed as trusts. As there is no distinction made between
sponsors, trustees and fund managers, the trustees play the roll of fund managers.
7. The increase in the number of mutual funds and various schemes have increased
competition. Hence it has been remarked by Senior Broker “mutual funds are too busy
trying to race against each other”. As a result they lose their stabilising factor in the
market.
8. While UTI publishes details of accounts their investments but mutual funds have not
published any profit and loss Account and balance sheet even after its operation.
9. The mutual fund have eroded the financial clout of institution in the stock market for
which cross transaction between mutual funds and financial institutions are not only
allowing speculators to manipulate price but also providing cash leading to the distortion
of balanced growth of market.
10. As the mutual fund is very poor in standard of efficiency in investors service; such as
despatch of certificates, repurchase and attending to inquiries lead to the detoriation of
interest of the investors towards mutual fund.
11. Transparency is another area in mutual fund which was neglected till recently
investors have right to know and asset management companies have an obligation to
inform where and how his money has been deployed. But investors are deprived of
getting the information.
(7) Future Outlook and Suggestion-
As mutual fund has entered into the Indian Capital market, growing profitable enough to
attract competitors into this cherished territory encouraging competition among all the
mutual fund operators, there is need to take some strategy to bring more confidence
among investors for which mutual fund would be able to project the image successfully.
The followings are some of the suggestions. As there is no comprehensive law to regulate
the mutual fund in India, uniform coordinated regulations by a single agency would be
formed which would provide the shelter to the investors. Secondly, as the investors are
not willing to invest in mutual fund unless a minimum return is assured, it is very
essential to create in the mind of the investors that mutual funds are market instruments
and associated with market risk hence mutual fund could not offer guaranteed income.
Thirdly, all the mutual funds are operated in the public sector. Hence private sector may
be allowed to float mutual funds, intensifying competition in this industry. Fourthly,
due to operations of many mutual fund, there will be need for appropriate guidelines for
self-regulation in respect of publicity/advertisement and interscheme transactions within
each mutual fund. Fifthly, the growth of mutual fund tends to increase the shareholdings
in good companies, give rise the fear of destabilising among industrial group, hence
introduction of non voting shares and lowering the debt-equity ratio help to remove these
apprehension. Sixthly, as there is no distinction between trustees, sponsors and fund
managers, it is necessary to regulate frame work for a clear demarcation between the role
of constituents, such as shelter, trustee and fund manager to protect the interest of the
small investors. Seventhly, steps should be taken for funds to make fair and truthful
disclosures of information to the investors, so that subscribers know what risk they are
taking by investing in fund. Eighthly, infrastructure bottlenecks will have to be removed
and banking and postal systems will have to be taken place for growth of mutual funds.
Ninethly, mutual funds need to take advantage of modern technology like computer and
tele-communications to render service to the investors. Lastly, mutual funds are made by
investors and investor’s interest ought to be paramount by setting standard of behaviours
and efficiency through self regularisations and professionalism.
(8) Conclusion-
With the structural liberalisation policies no doubt Indian economy is likely to return to a
high grow path in few years. Hence mutual fund organisations are needed to upgrade
their skills and technology. Success of mutual fund however would bright depending
upon the implementation of suggestions.

List of mutual funds in India-

Serial Name Web


No.
1 Alliance Capital Mutual Fund
2 AIG Global Investment Group Mutual
Fund Benchmark Mutual Fund
3 Benchmark Mutual Fund www.benchmarkfunds.com
4 Baroda Pioneer Mutual Fund www.barodapioneer.in
5 Birla Mutual Fund www.birlasunlife.com
6 Bharti AXA Mutual Fund www.bhartiaxa-im.com
7 Canara Robeco Mutual Fund www.canararobeco.com
8 CRB Mutual Fund (Suspended)
9 DBS Chola Mutual Fund www.dbscholamutualfund.com
10 Deutsche Mutual Fund www.deutschemutual.com
11 DSP BlackRock Mutual Fund www.dspblackrock.com
12 Edelweiss Mutual Fund investor.amc@edelcap.com
13 Escorts Mutual Fund www.escortsmutual.com
14 FORTIS Mutual Fund www.fortisinvestments.in
15 Franklin Templeton Mutual Fund www.templetonindia.com
16 Fidelity Mutual Fund www.fidelity.co.in
17 Goldman Sachs Mutual Fund www.gsam.in
18 HDFC Mutual Fund www.hdfcfund.com
19 HSBC Mutual Fund hsbcmf@hsbc.co.in
20 ICICI Securities Fund
21 ING Mutual Fund www.ingim.co.in
22 ICICI Prudential Mutual Fund www.pruicici.com
23 IDFC Mutual Fund www.idfcmf.com
24 JM Financial Mutual Fund www.JMFinancialmf.com
25 JP Morgan Mutual Fund www.jpmorganmf.com
26 Kotak Mahindra Mutual Fund www.kotakmahindramutual.com
27 KJMC Mutual Fund
28 LIC Mutual Fund www.licmutual.com
29 Morgan Stanley Mutual Fund www.msgfindia.com
30 Mirae Asset Mutual Fund www.miraeassetmf.co.in
31 Principal Mutual Fund www.principalindia.com
32 Quantum Mutual Fund www.quantumamc.com
33 Reliance Mutual Fund www.reliancemutual.com
34 Religare Mutual Fund
35 Religare AEGON Mutual Fund www.religareaegonmf.com
36 Sahara Mutual Fund www.saharamutual.com
37 SBI Mutual Fund www.sbimf.com
38 Shriram Mutual Fund
39 Sundaram BNP Paribas Mutual Fund
40 Shinsei Mutual Fund www.shinseifunds.com
41 Taurus Mutual Fund www.creditcapitalamc.com
42 Tata Mutual Fund www.tatamutualfund.com
43 UTI Mutual Fund www.utimf.com

List of mutual funds performed well in recent time-

(B) Fixed Deposit-

Foreign bank-
Bank 15- 30- 46- 61- 91- 120- 180- 271- 1yr- 2yrs- 3yrs- With
29 45 60 90 120 179 270 364 >2yrs >3yrs >5yrs effect
days days days days days days days days from

ABN- Amro 3.00 3.00 3.00 3.50 3.50 4.00 5.00 5.00 6.75 7.00 7.00 22-
Bank 05-09

Barclays 3.00 3.25 3.25 3.50 3.75 4.50 5.00 5.00 5.25 6.50 7.00 07-
05-09

Citi Bank 2.75 4.50 5.00 5.50 6.00 6.00 7.50 7.50 7.50 7.50 7.50 29-
05-09

DBS Bank 3.15 4.50 4.50 4.60 4.65 6.65 5.00 5.40 5.90 6.75 7.15 08-
05-09

Standard 2.75 3.00 3.00 3.75 4.00 4.00 4.60 4.60 5.00 6.00 6.25 22-
Chartered 05-09
Bank
The Bank of 4.50 5.00 5.00 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 19-
Nova Scotia 04-09

The 3.50 4.00 4.00 4.00 4.50 4.50 4.75 5.00 5.00 5.50 6.25 27-
HongKong 05-09
& Shanghai
Bank

Indian Banks- Public Sector


Bank 15- 30- 46- 61- 91- 120- 180- 271- 1yr- 2yrs- 3yrs- With
29 45 60 90 120 179 270 364 >2yrs >3yrs >5yrs effect
days days days days days days days days from

Allahabad 3.25 3.50 4.50 4.50 5.50 5.50 6.50 6.75 7.25 7.50 7.50 25-
Bank 05-09

Andhra Bank 4.00 4.00 5.00 5.00 5.50 5.55 6.50 6.75 7.25 7.25 7.25 05-
06-09

Bank of 3.75 3.75 4.50 4.50 5.50 5.50 6.75 7.00 7.25 7.25 7.25 11-
Baroda 05-09
Bank of 3.25 3.50 5.00 5.00 5.50 5.50 6.50 6.75 7.00 7.00 7.00 08-
India 05-09

Bank of 3.75 4.00 5.00 5.00 6.00 6.00 6.75 6.75 7.50 7.50 7.50 24-
Maharashtra 04-09

Canara Bank 3.25 4.00 5.00 5.00 5.50 5.50 6.50 7.00 7.25 7.50 7.50 01-
06-09

Central Bank 3.75 3.75 5.00 5.00 6.25 6.25 6.75 6.75 7.50 7.50 7.50 01-
of India 06-09

Corporation 3.00 3.25 3.50 5.50 5.50 6.50 6.75 7.50 7.50 7.50 06-
Bank 05-09

Dena Bank 3.00 3.25 4.25 4.25 5.25 5.25 6.25 6.25 7.25 7.25 7.50 30-
05-09

IDBI Bank 3.25 3.25 4.25 4.25 5.50 5.50 6.75 6.75 7.50 7.75 7.75 21-
05-09

Indian Bank 2.50 3.00 3.50 3.50 3.50 4.00 5.00 6.00 7.50 7.75 7.50 25-
05-09

Indian 2.50 3.00 3.50 3.50 3.50 4.00 5.00 6.00 7.50 7.75 7.50 25-
Overseas 05-09
Bank

Oriental 3.50 3.50 4.50 4.50 5.50 5.50 6.00 6.50 7.00 7.50 7.75 11-
Bank of 05-09
Commerce
Punjab & 2.00 2.00 4.00 4.00 5.50 5.50 6.50 7.00 7.50 7.50 7.50 15-
Sind Bank 05-09

Punjab 3.00 3.00 4.25 4.25 4.50 4.50 5.50 5.50 6.50 7.00 7.50 01-
National 05-09
Bank

State Bank 3.50 3.50 4.50 4.50 5.75 5.75 6.75 6.75 7.50 8.00 7.75 25-
of Bikaner & 05-09
Jaipur

State Bank 3.25 3.25 4.25 4.25 5.50 5.50 6.50 6.50 7.50 7.50 7.50 22-
of 05-09
Hyderabad

State Bank 3.25 3.25 4.25 4.25 5.50 5.50 6.50 6.50 7.25 7.50 7.50 18-
of India 05-09

State Bank 3.25 3.25 4.25 4.25 5.50 5.50 6.50 6.50 7.25 7.50 7.50 18-
of Mysore 05-09

State Bank 3.25 3.25 4.25 4.25 5.50 5.50 6.75 6.75 7.50 8.00 8.00 23-
of Patiala 05-09

State Bank 3.25 3.25 4.25 4.25 5.50 5.00 6.50 6.50 7.25 7.50 7.50 21-
of 05-09
Travancore

Syndicate 3.50 3.50 4.50 4.50 5.75 5.75 6.50 7.00 7.50 7.75 8.00 20-
Bank 05-09

UCO Bank 3.00 3.00 4.00 4.00 6.00 6.00 6.50 6.50 7.00 7.00 7.50 18-
05-09
Union Bank 3.25 3.50 4.00 4.00 4.50 4.50 5.75 5.75 7.00 7.00 8.00 11-
of India 05-09

United Bank 3.25 3.75 4.25 4.75 5.75 5.75 6.75 6.75 8.00 8.00 7.75 06-
of India 05-09

Vijaya Bank 3.50 4.00 5.00 5.00 5.50 5.50 6.50 7.00 7.50 7.75 7.75 17-
04-09

Indian Banks- Private Sector

Bank 15- 30- 46- 61- 91- 120- 180- 271- 1yr- 2yrs- 3yrs- With
29 45 60 90 120 179 270 364 >2yrs >3yrs >5yrs effect
days days days days days days days days from

Axis Bank 3.00 4.00 5.00 5.00 5.50 5.50 6.25 6.25 7.60 7.40 7.25 09-
05-09

City Union 5.00 5.00 6.00 6.00 7.00 7.00 7.00 7.00 8.75 9.00 8.75 11-
Bank 05-09

Development 4.75 4.75 5.75 5.75 7.00 7.00 8.00 8.00 8.75 8.75 8.50 21-
Credit Bank 05-09

HDFC Bank 2.25 3.00 3.50 3.75 4.50 4.50 5.50 6.50 7.25 7.50 6.00 18-
05-09

ICICI Bank 3.25 3.50 4.00 4.50 5.50 5.50 7.00 7.00 7.75 8.25 8.25 11-
05-09

IndusInd 3.25 3.75 4.50 4.75 6.00 6.00 6.75 7.00 8.00 8.00 8.25 25-
Bank 05-09

ING Vysya 3.50 3.50 4.50 4.50 5.25 5.25 5.75 5.75 6.25 6.90 6.90 18-
Bank 05-09

Karnataka 4.00 4.00 5.00 5.00 6.00 6.00 7.00 7.00 8.00 8.00 8.50 11-
Bank 05-09
Kotak Bank 2.75 3.25 3.75 3.75 4.50 4.50 5.50 5.50 6.50 7.00 7.00 07-
05-09

Tamilnadu 4.50 4.50 5.50 5.50 6.75 6.75 7.75 7.75 8.75 8.75 9.00 11-
Mercantile 05-09
Bank

The Bank of 3.50 3.50 4.50 4.50 5.75 5.75 6.50 6.50 8.00 8.25 8.25 22-
Rajasthan Ltd 05-09

The catholic 4.50 4.50 5.5.0 5.50 7.00 7.00 8.00 8.00 9.00 9.00 8.75 15-
Syrian Bank 04-09

The 4.50 4.50 5.50 5.50 7.00 7.00 7.50 7.50 8.75 8.75 8.50 18-
Dhanlakshmi 05-09
Bank
The Federal 3.00 3.00 4.25 4.25 5.50 5.50 6.50 6.50 7.50 7.50 7.75 07-
Bank 05-09

The J&K 3.00 3.50 3.50 3.50 5.50 5.50 6.75 6.75 7.50 7.50 8.00 20-
Bank 05-09

The Karur 4.00 4.00 4.75 4.75 6.00 6.00 7.00 7.00 8.25 8.50 8.50 01-
Vysya Bank 06-09

The Lakshmi 3.50 4.00 4.50 4.50 5.50 5.50 6.50 7.50 8.25 8.75 8.50 01-
Vilas Bank 06-09

The South 4.00 4.00 5.00 5.00 6.00 6.00 6.50 6.50 8.50 8.50 8.50 07-
India Bank 05-09

TNSC Bank 4.00 4.00 4.50 4.50 5.50 5.50 6.50 6.50 7.50 7.25 7.25 06-
05-09

Yes Bank 3.50 4.00 4.25 5.00 5.50 5.50 7.00 7.25 8.25 8.25 8.00 01-
05-09

The rate of interest on Fixed Deposit was revised on June 13, 2009 by State Bank of India
as under. The State Bank of India announced an across the board 25 basis points cut in
deposit rates effective from June 15.
Bank 15- 46- 91- 181- 1yr- 2 yrs 1000 1001 3yrs- 5yrs- 8 yrs
45 90 180 > 1 >2 ->1000 days days >5yrs >8yrs – 10
days days days yr yrs days ->3yrs yrs

State 3.25 4.25 5.50 6.50 7.25 7.50 7.75 7.50 7.50 8.00 8.25
Bank of
India

Revised 3.00 4.00 5.25 6.25 7.00 7.25 7.50 7.25 7.25 7.75 8.00

( business line – 14 june)

History:
Mahindra Finance was incorporated on January 1, 1991as Maxi Motors Financial
Services Limited and received certificate of commencement of business on February 19,
1991. Its name was changed to Mahindra and Mahindra Financial Services Limited on
November 3, 1992. it was registered with RBI as NBFC with effect from September 4,
1998 under section 45/A on the Reserve Bank of India act 1934.
As a subsidiary of Mahindra & Mahindra (M&M), Mahindra Finance is one of the
India’s leading Non-Banking Finance companies, focused on the rural and semi-urban
sectors. It provides finance for utility vehicle, tractors, cars, commercial vehicles,
construction equipment and personal loans. Additionally this company is also engaged in
insurance broking as well as mutual fund distribution and is now foraying into rural
housing finance arena. Today it has established one of the largest networks of branches
and a pan India coverage. Its affiliation with its parent company Mahindra & Mahindra
Ltd has always been a source of support and strength for it. It is going ahead with
aspiration to leverage every opportunity that exists and that can be created. It is
continuously trying to increase its potential in rural and semi-urban market by enhancing
its product mix. Adopting customer centric approach towards business it emphasize on
maintaining sound relationship with banker, investor and customer, strong capital base,
extensive branch network and dealer relationship. Its entry into Rural housing finance
business is an example of its multi-pronged initiatives that revolve around the growing
need of customer. Thus it can be said that company is directed towards new possibilities.

Key events in business history:

1993: Commenced financing of M&M UVs


1995: Opened first branch outside Mumbai, at Jaipur
1996: Commenced financing M&M dealers for purchase of
tractors
1998: Launches pilot project for retail tractor financing
1999: Commenced tractor retail financing in rural and semi-
urban areas
2001: Total asset crossed Rs. 10 billion
2002: Commenced financing of non M&M vehicles
Received Tier II debt from International Finance
corporation
Made first securitization transaction of Rs. 434.8 million
2004: Received a long term credit rating of AA+/Stable
Opened a branch in Port Blair
Listing of non convertible debentures on BSE on the
wholesale debt market segment
Securitisation of tractor assets of Rs. 256.6 million
2005: Tied up with HPCL
Made MIBL, a fully owned subsidiary
2006: Issued its IPO
Tied up with Maruti
Launched marketing campaign
Reached a new benchmark with 400 branches

Board and Management-

At Mahindra Finance currently have 10 directors vested with the charge of general
supervision, direction and management of the operations and business of company. The
primary responsibility of Board of Directors includes-
(1) Overseeing high standard of corporate governance and compliance with various
laws
(2) Shaping policies and procedures
(3) Monitoring performance and evolving the growth strategy
(4) Setting up counter party and other prudential risk management limits
(5) Overseeing financial management and approving various lines of business

Mr. Anand G. Mahindra (Chairman)


Mr. Bharat N. Doshi ( Vice Chairman)
Mr. Uday Y. Phadke
Mr. Anjanikumar Choudhari
Mr. Dhananjay Mungale
Mr. Manohar G. Bhide
Mr. Nasser Munjee
Dr. Pawan Goenka
Mr. Piyush Mankad
Mr. Ramesh G. Iyer (Managing Director)

Day-to-day management is carried out by a Management Committee comprising:


Mr. Ramesh Iyer - Managing Director
Mr. V.Ravi - Chief Financial Officer
Mr. Apurv Verma - Vice President (Operations)

Registered Office:
Gateway Building
Apollo Bunder, Mumbai- 400001

Corporate Office:
Sadhana House, 2nd Floor
Behind Mahindra Towers,
570, P. B. Marg, Worli
Mumbai- 400 018

Business:
(1) The loan products designed by it, both in terms of amount and tenure are based
on usage and economic life of the vehicle. Commercially UVs are used for both
passenger as well as good transport. Tractors are used for both farm and haulage
application.
(2) Innovative and flexible repayment schedule is designed on a case to case basis
and suits the need of every borrower. It offers quarterly, monthly, half yearly
repayment schedule and one can repay via post dated cheques, demand drafts
and cash
(3) For small entrepreneur or self employed individuals such as transport operators,
taxi operators and agriculturists.
(4) Prefer recruitment of local employees into branches and provide them training
on tailor made training programs in order to be familiar with local culture,
practices and environment.
(5) The loan assets, total income and profit after tax has grown over the last few
years.
Promoters:

Vision:
The vision of the company is to become the leading Rural Finance Company and
continue to retain the leadership position for Mahindra product. Company wants to
become the preferred provider of financial services, across the rural and semi-urban areas
of India. Its aim is to provide a range of financial products and services to customers
through our nationwide distribution network. It seeks to position itself between the
organized banking sector and local money lenders by offering competitive, flexible and
speedy lending services.

Products:
Mahindra Finance is a Non Banking Financial Organisation (NBFC). The main areas in
which it deals are Financing, Fixed Deposit and Pan India distributor of Mutual Funds.
In financing activities it includes-
(1) Asset finance- As a part of its core business it provides loan for utility vehicles
as well as construction equipment. It offers loan for both, new as well as pre-
owned vehicles.
(2) Personal loan- It offers loan to fund medical treatment, wedding, education,
working capital of farming needs, purchase of furniture and consumer durables
and so on.
(3) Insurance broking- Mahindra Insurance Brokers Limited, a wholly owned
subsidiary of Mahindra Finance, mainly deals with offering direct life and non-
life insurance broking for corporations and retail customers.

(4) Housing finance- We are catering to the high demand for home loans from
semi-urban and rural areas through our wholly owned subsidiary- Mahindra
Rural Housing Finance Limited, which was incorporated during the year. With
this we intend to capitalize on our distribution reach for creating a niche in this
sector.
(5) Mutual fund distribution- Mutual fund is a trust that pools the saving of a
number of investors who share a common financial goal. The money thus
collected is then invested in invested in capital market instruments such as
shares, debentures and other securities. The income earned through these
investments and the income appreciation realised by its unit holders in
proportion to the number of units owned by them.
The Mahindra Finance Mutual Fund distribution offers investment
advisory services through its brand “Finsmart”, with a team of AMFI certified
professionals. It is vigorously pushing forth to make mark on mutual fund arena. Since its
inception in 2006 the division has grown in reach from 5 states to 10 and caters to over
20000 customers.
Mahindra Finance encompasses needs of clients. So while it believes in making assets
easily available, it also believes in catering to those who want to create wealth from these
assets. Its Investment Advisory Services acts as an avenue to help create and multiply
wealth.
Recently it has received the necessary permission from Reserve Bank of India (RBI) to
start the distribution of Mutual Fund products through its network. Earlier it was only
participating in the liability requirements of our customers but with a mutual fund
distribution business, it is participating in their asset allocation.
When it comes to investing, everyone has unique needs based on their own objectives
and risk profile. While many investment avenues such as fixed deposits, bonds etc. exist,
it is usually seen that equities typically outperform these investments, over a longer
period of time. Hence company makes suggestion that, systematic investment in equity
allows one to create substantial wealth.
However, investing in equity is not as simple as investing in bonds or bank deposits,
because only proper allocation of portfolio gives maximum returns with moderate risk,
and this requires expertise and time.
Its Investment Advisory Services help investors to invest their money in equity through
different Mutual Fund Schemes. It ensures the best for its clients by identifying products
best suited to individual needs.
(6) Fixed Deposit- Fixed Deposit is a scheme in which a definite amount is
invested for a certain period. The institution in which the money has been
invested provides fixed interest to the investor. Different institutions offer
different interest rates.
At present Mahindra Finance has started to accept fixed deposit from public from 1st
January 2009. The brief details of the FD scheme are as below-
Non-cumulative half yearly scheme-

Minimum Period Interest *#


Amount (Months) p.a.
12 8.75%
Rs. 25,000 24 9.25%
36 9.75%

Cumulative scheme-

Minimum Period Amount Interest* Effective


Amount (Months) Payable p.a. Yield p. a.**
12 Rs. 10,900 9.00% 9.00%
18 Rs. 11,430 9.25% 9.53%
Rs. 10,000
24 Rs. 11,990 9.50% 9.95%
36 Rs. 13,310 10.00% 11.03%

* Senior Citizens / Shareholders / Employees will get an additional rate of 0.25% per
annum
# Interest payment half yearly on 30th September and 31st March only through ECS.
** Compounded Annually
Mahindra Finance offers-
(1) Personalised Service- We believe in providing personalised service and
individual attention to each client to ensure that we understand their investment
goals and help them achieve it.
(2) Professional Advice- We offer expert advice on equity and debt portfolios with
an objective to provide consistent long-term return while taking calculated market
risks. Our approach helps our clients build a proper mix of products, and not
concentrate on just one individual product. Hence, serving their long-term
objectives in the best way.
(3) Long-term Relationship- We believe that long-term vision is the only means to
steady wealth creation. However to achieve this one also needs to take advantage
of short-term market opportunities while not loosing sight of long-term
objectives. Hence we partner all our clients in realising their long-term vision.
(4) Personalised Service- We believe in providing personalised service and
individual attention to each client to ensure that we understand their investment
goals and help them achieve it.
(5) Professional Advice- We offer expert advice on equity and debt portfolios with
an objective to provide consistent long-term return while taking calculated market
risks. Our approach helps our clients build a proper mix of products, and not
concentrate on just one individual product. Hence, serving their long-term
objectives in the best way.
(6) Long-term Relationship- We believe that long-term vision is the only means to
steady wealth creation. However to achieve this one also needs to take advantage
of short-term market opportunities while not loosing sight of long-term
objectives. Hence we partner all our clients in realising their long-term vision.
(7) Access to Research Reports- We provide our clients with access to the expert
opinion of economists and analysts from CRISIL, one of the leading financial
research and rating companies of India. This is because, we believe that unbiased
research is the key to providing sound advice in making informed investment
decisions.
(8) Transparency and Confidentiality- Our clients receive regular portfolio
statements from us via email. They can also view the detailed performance of
their investment portfolio on the web, the access to which is restricted to the client
only. Moreover, our monitoring system enables us to detect any unauthorised
access to the portfolio.
(9) Flexibility- To facilitate smooth dealing and consistent attention, all our clients
are serviced by their individual Relationship Executives. Relationship Executives
provide you with completely hassle-free, customised services taking care of all
the administrative aspects of your investments. This includes submission of
application forms to fund houses and a monthly report on the overall performance
of your investment portfolio.
(10) Hassle-free investment- We want to ensure that the process of investing
remains hassle-free. We also want to offer complete customised service to our
clients. It is for these reasons that our Relationship Executives take care of all the
administrative aspects of investments like helping them to submit the application
forms to fund houses and other such formalities like monthly reports on the
overall state of investments of the clients and performance of portfolios.

Company’s clients also enjoy:

(1) Information updates on a daily basis through email


(2) Ease of viewing their portfolio on the internet
(3) Investment advice at their convenience
(4) Weekly, fortnightly and monthly reports sent to them via email, on request
(5) The freedom to contact us, anywhere in India
(6) Access to the multiple products offered by Mahindra Finance through their
Relationship Executive.
Research is one of the most important parts in survey to collect information and
knowledge. Marketing research is defined as systematic design, collection, analysis and
reporting of data and finding relevant to a specific marketing situation facing the
company.

Problem and research objective-


The main objective of study was to find the investment preference of customer between
Mutual Fund and Fixed Deposit. The most difficult part of this study was to identify the
potential customers and collect the data without knowing them. Due to slowdown in the
market there was a fear in the investors. So at that time getting a positive response from
investors was a tough job. For collecting data first I planned and identify the places where
to go? and collected the information from investors by personal interview method.
The main things to be known from investors was –
(1) Annual income and saving
(2) Awareness about Mutual Fund
(3) Their preference
(4) Annual investment
Research approach-
In this project I made a direct contact with the investors and interviewed them. Here I
have used Analytical approach. Analytical research approach uses facts or information
already available in the world and analyzes these to make a critical evaluation of the
materials. Research studies concern with human behavior. Here questionnaire method has
been used here for collecting primary data. This data will be converted into quantitative
form. After that data has been analysed.

Research plan
After identifying and defining research objective clearly, next stage is to plan and design
the research. The research design provides a complete guideline for data collection. The
research process depends upon developing the most efficient plan for gathering the
needed information. It includes the selection of research approach, designing sampling
plan, designing the method of data collection.
My objective was to find out the investment preference of investors.
For this I have to find the investors who have PAN card and invest in Mutual Fund. It
was difficult to find the card holder investors. Yet normally Fixed Deposit is done by
common investors, but it was tough to find them.
Sampling:-
After deciding research approach, now I had to decide on the sampling plan which was

one of the important task, because from the bunch of people I had to select only those

people ,whom I can target from now onward .There are three way of sorting the data.
o Sampling Unit: - who is to be surveyed? And now my task was to

define the target population, which will be sampled from the

number of people.

o Sample Size: - large sample give more reliable result than small

sample, so for this reason I had taken around 40 people to whom I

contacted.

Statistics in general deals with large numbers. It does not deal with a single figure. All the
items under considerations in any field of enquiry constitute a universe or population.
The analysis of the entire population in the study is called as census method of collecting
data. In practice on the other hand, it is so happens that it is not possible to examine or
consider all the items. Again in maximum cases consideration of all the items of a
population is also not necessary. Sometimes it is possible to obtain sufficiently accurate
results by studying a part of the population. Thus the few items are selected from the
population in such a way that they are the representative of the universe. Such a selection
of the population is called ‘sampling’.
Sampling is simply the process of learning about population on the basis of sample drawn
from it. Under this method a small group of universe is taken as the representative of the
whole mass and the results are drawn. It is the method to make social investigation
practicable and easy.
The prime objective of the sample survey is to obtain accurate and reliable information
about of the universe with minimization of cost, time, and energy.
Different types of sampling techniques are used for drawing a sample plan. The methods
of sampling are classified into two types:
1. Probability sampling and
2. Non-probability sampling

1. Probability sampling:
It provides a scientific technique of drawing samples from the universe. In such a case
each unit has the some defined pre-assigned probability of being chosen in the sample.
Different types of probability sampling techniques are:

Random Sampling:
A random sampling is one where each item of in the universe has an equal or known
opportunity of being selected. According to W.M.Harper, ‘a random sample is a sample
selected in such a way that every item in the population has an equal chance of being
included’. This type of sampling is more suitable in comparatively large samples.

Stratified random sampling:


When the population of a research is heterogeneous with respect to the variables
collected under study than the technique of stratified sampling is used to obtain more
efficient and accurate result. Stratification means division of the universe into groups
according to geographical, sociological or economic characteristics.
Systematic sampling:
Under this method the sample is taken from the list proposed on the systematic
arrangements either on basis of alphabetic order or on house number or any other
method. In this method only the first sample unit is selected at random and the remaining
units are automatically selected in a definite sequence at equal spacing from one another.
Steps involved in systematic sampling:
 The population is arranged in serial numbers from 1 to N and the size of sample is
determined
 The sampling interval is determined by dividing the population by the size of the
sample i.e. N/n=K. where K=sample interval, n=sample size and N=size of
population.
 Any number is selected at random from the first sampling interval. The
subsequent samples are selected at equal or regular intervals.
Cluster sampling:
Under this method the entire population is divided into some acceptable sub-divisions
which are termed as clusters and simple random sampling of these clusters is drawn and
then the survey of each and every unit in the selected clusters is made.
Multi-stage sampling:
This method is generally used in selecting a sample from a very large area. It refers to a
sampling technique which is carried out in various stages. Here the population is regarded
as made of a number of primary units, each of which is further composed of a number of
secondary stage units which is further composed of third stage units and so on till a
researcher ultimately reach the desired sampling unit. At each stage there is a random
selection and the size of sample may be proportional or disproportional depending on the
size and character of variations based on the purpose of enquiry. Hence the area of survey
is restricted into small units.

2. Non-probability sampling:
Non-probability sampling or judgment sampling is based on the personal judgment.
Under this method a desired number of sample units are selected deliberately or
purposely depending upon the subject of the enquiry so that only the important items
representing the true characteristic of population are included in the sample. The
methods of non-probability sampling are
 Purposive sampling
 Quota sampling and
 Convenience sampling

Purposive sampling:
Here the researcher selects the units of samples on the judgment of his/own decision and
nothing is left with the chance.
Quota sampling:
In this case the samples are stratified into small units. After this the number of sample
units to be selected from each stratum is decided by the researcher in advance. This
number is called as quota which is fixed according to some specific characteristic such as
income group, sex, occupation etc.
Convenience sampling:
It is known as unsystematic, careless, accidental sampling. The sample is selected in
accordance to the requirement of the researcher. The requirement may be in respect of
availability of data, time factor etc.

Data source:-
A collection of facts from which conclusions may be drawn is known as data. These facts
may be noticed by either experience or observation. For this project both primary and
secondary data were the most valuable source of information.
Secondary data:-
Data available in the literature, journals, magazines, internet, library, books, reports,
recommendations or outcomes of various committees and survey etc which is collected
by other researchers for their purpose and utilized by them is secondary data. This data
can be important for the researcher because secondary data provide a starting point for
research and offer the valuable source of information. This gives information about the
work done by other previous researchers and their findings and recommendations about
the problem under some restrictions. Thus it helps to differentiate the research of later
researcher from earlier one. It is less expensive and less time consuming.
The secondary data was important source for my project because my
first aim was to find out the information about the Mahindra Finance and its various
products. So I started collecting data from materials provided by company and its internet
sites which helped me in finding out the desired information about the industry,
company, its vision and plans.

Primary data:-
Data collected by researcher for his own purpose first time is called primary data. Thus
we can say primary data are data freshly gathered for a specific purpose. Primary data can
be collected by observation method, personal interview, questionnaire method and case
survey method. Here I have used questionnaire method for primary data collection.
Because there was scarcity of time and resources with me and questionnaire method was
sufficient to fulfill my need for research. Under this method I used the questionnaire
provided by company office. Answers of questions of questionnaire will give a clear
picture of my research.

Contact Methods
To make a contact with customers I used only two ways of contacting them.

1. Personal Interview: - This method was the most appropriate way of

survey, because by personal interview I came to know their

awareness about the Mahindra Finance and its various products. It

provides information about brand image of company and its

products in the market. The personal behavior and many more

things about customer also.

2. Telephone: - This method is also used by me for once, because the

client had no time for me, and there was no other option for me.

Analysis & Interpretation

Findings
Recommendations and suggestions
Bibliography
Questionnaire