Standard Charteres Report Final-2003 FRMT

MUTUAL FUNDS AND OTHER INVESTMENT TOOLS COMPARITIVE ANALYSIS AND INVESTMENT STRATEGIES
SUMMER INTERNSHIP
PROGRAMME
PROJECT REPORT
ON
MUTUAL FUNDS AND OTHER
INVESTMENT TOOLS COMPARITIVE
ANALYSIS AND INVESTMENT
STRATEGIES
2008
Submitte
d by:
1
A REPORT
ON
MUTUAL FUNDS AND OTHER INVESTMENT TOOLS
COMPARITIVE ANALYSIS AND INVESTMENT
STRATEGIES
2
Table of Content
1. Acknowledgement……..……………………………………………………………..4
2. Abstract……………………………………………………………………………………..5
3. Objective, Limitation. Reference……………………………………………….6
4. Satndard Chartered Bank…………………………………………………………..7
5. Investments……………………………………………………………………………..13
6. Survey Analysis………………………………………………………………………...25
7. Savings Account…………………………………………………………………….….34
8. ULIP…………………………………………………………………………………….…….36
9. Mutual Funds…………………………………………………………………….……..46
10.Taxation in India……………………………………………………………….……….65
11.Trend of Stocks……………………………………………………………….…………75
12.Annexures I……………………………………………………………………………….79
13.Annexure II……………………………………………………………..…………………80
14.Annexure III……………………………………………………………………………….82
15.Conclusion………………………………………………………………………………….84.
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ABSTRACT
The Project includes the study of the products available in the market like
ULIP, Mutual Funds, Saving account, Taxation in India and about the stocks
available in the market. To analyze the features of these products, there
advantages etc.
A Survey was condusted to gain the primey data to judge the investors facet
before investing in any of the investment tools and thus to scrutinize the
important aspects for the investors before investing that further helpd in
analyzing the relation between the features of the products and the
investors’ requirements.
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OBJECTIVE
The Objective of the Report is to map the information required to assess

1. Knowledge and a profound understanding of the products like ULIP,
Saving accounts, mutual funds about taxation in India.
2. Study various aspects to analyze the Performance of the Products.
3. To study various provisos -

• Predicition of the investor’s outlook- To realize the vital facet to
glance on before investing in a Scheme.
I.e. - Individual Risk Tolerance, Investing capacity, Relation

among investors demographic property, age, Job etc. with their
investing point of view.
LIMITATIONS
1. Secondary Data-Useful Financial insights are not easily available.

2. Time Constraint- Time was not sufficient to research on all the
investment tools available.
3. Primary data- The survey sample was not very large for analysis and
the major population in the sample group was middle class group
making deviation in the results and the inaccuracy of the results
because of respondents response.
SOURCES
• The brouchers available from the banks for studying the features of
products.
• Research Websites- Amfi.com, Mutualfundsindia.com,
Valueresearchonline.com, investopedia.com.
• Primary data for Surveys etc.
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STANDARD CHARTERED BANK
Leading the way in Asia, Africa and the Middle East
In its unique position as an international bank with strong franchise,

Standard Chartered combines an in-depth knowledge of local markets with
global product expertise to offer effective financial solutions. The bank
capitalises on its onshore presence across Asia, Africa and the Middle East to
offer customers convenient and reliable access to the widest range of
currency markets, to date local market information, country-specific global
risk management strategies, and customised capital raising and liquidity
management solution.
With 150 years of emerging market experience, our in-depth understanding

of the local market is unrivaled by most other financial institutions,
especially in the currencies of Asia, the Middle East and Africa. We are able
to meet the needs of local corporates, multinational companies, development
organisations, investment and financial institutions, and central banks
around the world.
Understanding that each customer's needs are unique, Standard Chartered

customises Client Solutions for risk management, yield enhancement,
liquidity management and debt financing:
• Structured yield enhancement products to match risk appetites and

investment requirements
• Solutions for currency and interest rate exposures
• Access to more than 100 onshore and offshore illiquid and restricted
currencies
• US Dollar Liquidity Fund for effective cash management
• Local currency and G3 currency fixed income and loan syndications
• Asset Securitisation
• Structured trade and export financing for importers and exporters
• Project financing services
• Corporate advisory services
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Features
International Network, Local Presence

With an international network which spans the major financial centres (New
York, London, Hong Kong and Singapore) and the world's emerging markets
(India, the Middle East, Africa), we are uniquely placed to meet our
customers' needs wherever they are in the world.
Innovative Client Solutions

We leverage a global perspective to develop creative and effective financial
solutions based on our in-depth local market knowledge and understanding
of our customers' needs.
One-Stop Range of Products and Services

We have a full range of foreign exchange and risk management solutions to
meet the needs of clients across the world.
Standard Chartered Bank in India
Standard Chartered Bank is the largest international banking Group in India

with 78 branches in 30 cities. The Bank is having a combined customer base
of 2.5 million in retail banking and over 1200 corporate customers.
The key businesses of Standard Chartered Bank in India include consumer

banking - primarily credit cards, mortgages, personal loans and wealth
management - and - wholesale banking, where the Bank specializes in the
provision of cash management, trade, finance, treasury and custody
services.
Standard Chartered was the first to issue global credit card in India, the first
to issue Photocard, the first Picture Card and was the first credit card issuer
to be awarded the ISO 9002 certification.
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Some other product innovations of Standard Chartered Bank in India include

the 'Sapnay' credit card, the international debit card that provides free
access to over 1500 Visa ATM's, a first in the banking industry, Mileage, an
overdraft facility against the security of a car and Smart Credit, a personal
line of credit for sa;aried customers.
The name is derived from Standard & Chartered. Standard Bank of British
South Africa merged with Chartered Bank of India, Australia and China in
1969. Chartered Bank opened its first overseas branch in India, at Kolkata,
on 12 April 1858. During that time Kolkata was the most important
commercial city and was the hub of jute and indigo trades. The merger with
the Standard Bank of British South Africa in 1969 and the acquisition of
Grindlays Bank in 2000 were two key events that have played an important
role in making the Bank the largest international bank in India.
MORE THAN BANKING:

Corporate Social Responsibility (CSR) is at the core of the values of Standard
Chartered Bank. The Bank is committed to the communities and
environments in which it operates. The Bank strongly supports the trend
towards delivering shareholder value in a socially, ethically and
environmentally responsible manner. ‘Living with HIV’ is a global community
initiat ive of Standard Chartered that is aimed at raising awareness of
HIV/AIDS amongst employees through workshops and amongst stakeholders
by providing thought leadership. Under ‘Seeing is believing’, a programme
that aims to restore sight to one million people globally by 2006, the Bank
has raised funds to help 8000 people to see.
In partnership with Sight Savers International and VISION2020 the Bank is
now involved in two flagship projects at Vishakhapatnam and Muzaffarpur,
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both aimed at the elimination avoidable blindness. Furthermore, in support

of the communities ravaged by the Asian Tsunami Crisis in 2004 the
Standard Chartered Group committed US$ 1 million to India. The Bank is
utilizing these funds for the rehabilitation of two villages adopted near
Chennai.
In 2004, Standard Chartered initiated the phenomenally successful
Standard Chartered Mumbai Marathon - an event dedicated to charity fund
raising. The two marathons held so far have forged partnerships with
customers and charities and deepened the Bank’s ties with the community,
with over US$ 1 million being raised in 2005.
PRODUCTS OFFERED
Standard Chartered bank provides different products and services in order to
cater the needs of the customers which can be broadly classified into the
following categories:
1. PERSONAL BANKING: To cater the diverse financial needs, Standard

Chartered offers a wide range of premium banking products and
services through its network of 81 branches in 31 cities across the
country.As a privileged customer of this bank, the customers can
always be assured of a banking service that is flexible enough to tailor-
make a product suite to take care of his specific banking needs.
2. SME BANKING: SME Banking provides integrated financial solutions

to small and medium businesses, through a relationship management
approach. Its customer focused product offerings include working
capital finance, trade services, foreign exchange, and cash
management.
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3. COMMERCIAL BANKING: Standard Chartered has maintained a long

local presence, since 1858, with particular emphasis on relationship
banking. Significant networks have been established with vendors and
financial-related organisations to enable it to offer the customers a
comprehensive range of flexible financial services, with special focus
on transactional banking products. Supported by state-of-the-art
operations, Standard Chartered is pro-active in improving every part of
services. Electronic Delivery system has been put in place to ensure
that transactions are handled speedily. It has its Cash Product
Specialists and dedicated Customer Service Centres to provide its
customers with effective solutions.
In the project, I studied the products offered by the Standard Chartered

bank, its features, functions, scope and working. Thereby to understand the
workings and functions of Standard Chartered Bank, the scope of this project
has been limited to the detailed study of only three products offered by this
bank under the above mentioned categories:
1. Savings Account.
2. Unit Linked Insurance Plan (ULIP).
3. Mutual Funds.
4. Taxation in India.
5. Stock Trends.
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INVESTMENTS
Savings form an important part of the economy of any nation. With the
savings invested in various options available to the people, the money acts
as the driver for growth of the country. Indian financial scene too presents a
plethora of avenues to the investors. Though certainly not the best or
deepest of markets in the world, it has reasonable options for an ordinary
man to invest his savings.
Investments, unlike works of art, cannot afford the luxury of experimenting.
Investing is not guesswork. It takes more than just a 'tip', it needs training
to plan, instinct to pick and sheer intellect to make it work for the investor.
Human nature is fickle, his wants keep changing.
An investment can be described as perfect if it satisfies all the needs of all

investors. So, the starting point in searching for the perfect investment
would be to examine investor needs. If all those needs are met by the
investment, then that investment can be termed the perfect investment.
Most investors and advisors spend a great deal of time understanding the
merits of the thousands of investments available in India. Little time,
however, is spent understanding the needs of the investor and ensuring that
the most appropriate investments are selected for him.
The Investment Needs of an Investor
The investment needs of an investor are simply his lifestyle needs converted
into financial terms. These include the normal living expenses,
accommodation, food, as well as education, health, recreation, transport,
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special occasions like marriages, festivals etc. These needs are defined not
only in current terms but also over the rest of the life. These needs tend to
remain the same over the years. It is the current lifestyle and the lifestyle
desired in future that determines the attitude of investor towards
investments.
By and large, most investors have eight common needs from their
investments: 1. Security of Original Capital; 2. Wealth Accumulation; 3.
Comfort Factor; 4. Tax Efficiency; 5. Life Cover; 6. Income; 7. Simplicity; 8.
Ease of Withdrawal; 9. Communication.
• Security of original capital: The chance of losing some capital has

been a primary need. This is perhaps the strongest need among
investors in India, who have suffered regularly due to failures of the
financial system.
• Wealth accumulation: This is largely a factor of investment

performance, including both short-term performance of an investment
and long-term performance of a portfolio. Wealth accumulation is the
ultimate measure of the success of an investment decision.
• Comfort factor: This refers to the peace of mind associated with an

investment. Avoiding discomfort is probably a greater need than
receiving comfort. Reputation plays an important part in delivering the
comfort factor.
• Tax efficiency: Legitimate reduction in the amount of tax payable is

an important part of the Indian psyche. Every rupee saved in taxes
goes towards wealth accumulation.
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• Life Cover: Many investors look for investments that offer good return
with adequate life cover to manage the situations in case of any
eventualities.
• Income: This refers to money distributed at intervals by an

investment, which are usually used by the investor for meeting regular
expenses. Income needs tend to be fairly constant because they are
related to lifestyle and are well understood by investors.
• Simplicity: Investment instruments are complex, but investors need

to understand what is being done with their money. A planner should
also deliver simplicity to investors.
• Ease of withdrawal: This refers to the ability to invest long term but
withdraw funds when desired. This is strongly linked to a sense of
ownership. It is normally triggered by a need to spend capital, change
investments or cater to changes in other needs. Access to a long-term
investment at short notice can only be had at a substantial cost.
• Communication: This refers to informing and educating investors

about the purpose and progress of their investments. The need to
communicate increases when investments are threatened.
It is also pertinent to differentiate between needs and wants. Wants can be

described as transient needs. Wants focus on the short-term, and often lead
to long-term investment disappointment.
• Security of original capital is more important when performance falls.
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• Performance is more important when investments are performing

well.
• Failures engender a desire for an increase in the comfort factor.
Perfect investment would have been achieved if all the above-mentioned

needs had been met to satisfaction. But there is always a trade-off involved
in making investments. As long as the investment strategy matches the
needs of investor according to the priority assigned to them, he should be
happy.
The Ideal Investment strategy should be a customized one for each investor
depending on his risk-return profile, his satisfaction level, his income, and
his expectations. Accurate planning gives accurate results. And for that there
must be an efficient and trustworthy roadmap to achieve the ultimate goal of
wealth maximization.
Investment Planning
Investment Planning involves identifying your financial goals throughout

your life, and prioritising them. Investment Planning is important because it
helps in deriving the maximum benefit from the investments.
Success as an investor depends upon ability to choose the right investment

options. This, in turn, depends on the requirements, needs and goals. For
most investors, however, the three prime criteria of evaluating any
investment option are liquidity, safety and return.
Investment Planning also helps to decide upon the right investment strategy.
Besides individual requirement, investment strategy would also depend upon
age, personal circumstances and risk appetite. These aspects are typically
taken care of during investment planning.
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Investment Planning also helps in striking a balance between risk and

returns. By prudent planning, it is possible to arrive at an optimal mix of risk
and returns that suits particular needs and requirements.
Investment means putting the money to work to earn more money. Done
wisely, it can help you meet financial goals like buying a new house, paying
for college education of children, of enjoying a comfortable retirement etc.
Investing even a small amount can produce considerable rewards over the
long-term, especially if you do it regularly. But one needs to decide about
how much he / she wants to invest and where to invest.
Choosing the Right Investment Options
The choice of the best investment options will depend on personal

circumstances as well as general market conditions. For example, a good
investment for a long-term retirement plan may not be a good investment
for higher education expenses. In most cases, the right investment is a
balance of three things: Liquidity, Safety and Return.
Liquidity – Accessiblty of money

How easily an investment can be converted to cash, since part of invested
money must be available to cover financial emergencies.
Safety - The risk involved

The biggest risk is the risk of losing the money that has been invested.
Another equally important risk is that investments may not provide enough
growth or income to offset the impact of inflation, which could lead to a
gradual increase in the cost of living. There are additional risks as well (like
decline in economic growth). But the biggest risk of all is not investing at all.
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Return – The expectation from the investments

Investments are made for the purpose of generating returns. Safe
investments often promise a specific, though limited return. Those that
involve more risk offer the opportunity to make - or lose - a lot of money.
The Investment Process
As investors, we would all like to beat the market handily, and we would all
like to pick "great" investments on instinct. However, while intuition is
undoubtedly a part of the process of investing, it is just part of the process.
As investors, it is not surprising that we focus so much of our energy and
efforts on investment philosophies and strategies, and so little on the
investment process. It is far more interesting to read about how Peter Lynch
picks stocks and what makes Warren Buffett a valuable investor, than it is to
talk about the steps involved in creating a portfolio or in executing trades.
Though it does not get sufficient attention, understanding the investment
process is critical for every investor for several reasons:
1. The investment process outlines the steps in creating a portfolio, and

emphasizes the sequence of actions involved from understanding the
investors risk preferences to asset allocation and selection to
performance evaluation. By emphasizing the sequence, it provides for
an orderly way in which an investor can create his or her own portfolio
or a portfolio for someone else.
2. The investment process provides a structure that allows investors to
see the source of different investment strategies and philosophies. By
so doing, it allows investors to take the hundreds of strategies that
they see described in the common press and in investment newsletters
and to trace them to their common roots.
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3. The investment process emphasizes the different components that are

needed for an investment strategy to by successful, and by so doing
explain why so many strategies that look good on paper never work
for those who use them.
FIVE STEP INVESTMENT PLAN
Investing is a science, not an art,. We suggest a five-stage investment plan

that may be practiced by investors looking for multiplying their hard-earned
money.
 Need Analysis and Profiling

 Internalizing and Evaluating the Available Avenues
 Mapping and Matching the Profile
 Designing an Optimum Portfolio
 Continuous Monitoring and Portfolio Management
The first step is performing a Need Analysis check. The requirements and
expectations of the investor should be determined. The needs should be
separated from the desires. The facts that should be taken into account are
their age, their profession, the number of dependents, and their income. By
doing this check, the risk profile of the investor should me designed.
The next step would be internalizing the needs. Various investment avenues
should be analyzed. The risk-return profile of investment products is
evaluated in this step. Every investment product varies according to its
return potential and riskiness. Investment products giving a high rate of
return are generally risky and volatile. The products giving a lower rate of
return usually are less risky. Therefore all the available avenues should be
evaluated.
The next step would be mapping the risk-return profile of the investor on to
the investment portfolio. The investment products are matched with the
risk-return profile of the investor. All the investment alternatives that offer
expected rate of return are selected for consideration.
Then an optimum portfolio is designed for the investor. The basket of

investment avenues selected in the previous step are given due weightage
and appropriate amount of money is invested in each of the investment
avenue so as to get maximum return with minimum possible risk.
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Finally a continuous watch on the portfolio is extremely important.

Fundamental analysis of the investment products done in the previous
stages would only help in selecting the right product but the right time of
entry or exit from a particular stream is evaluated by doing a technical
analysis. For this professional portfolio management is a must.
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Investment Strategies in India
Conventionally, Indian investors were investing in the following avenues:
Fixed Deposits – They cover the fixed deposits of varied tenors offered by
the commercial banks and other non-banking financial institutions. These are
generally a low risk prepositions as the commercial banks are believed to
return the amount due without default. By and large these FDs are the
preferred choice of risk-averse Indian investors who rate safety of capital &
ease of investment above all parameters. Largely, these investments earn a
marginal rate of return of 6-8% per annum.
Government Bonds – The Central and State Governments raise money

from the market through a variety of Small Saving Schemes like national
saving certificates, Kisan Vikas Patra, Post Office Deposits, Provident Funds,
etc. These schemes are risk free as the government does not default in
payments. But the interest rates offered by them are in the range of 7% -
9%.
Money-back insurance - Insurance in India is mostly sold and bought as

investment products. They are preferred because of their add-on benefits
like financial life-cover, tax-savings and satisfactory returns. Even if one
does not manage to save money and invest regularly in financial
instruments, with insurance, the policyholder has no choice. If he does not
pay his premiums on time, his insurance cover will lapse. Money-back
Insurance schemes are used as investment avenues as they offer partial
cash-back at certain intervals. This money can be utilized for children’s
education, marriage, etc.
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Endowment Insurance – These policies are term policies. Investors have

to pay the premiums for a particular term, and at maturity the accrued
bonus and other benefits are returned to the policyholder if he survives at
maturity.
Bullion Market – Precious metals like gold and silver had been a safe
heaven for Indian investors since ages. Besides jewellery these metals are
used for investment purposes also. Since last 1 year, both Gold and Silver
have highly appreciated in value both in the domestic as well as the
international markets. In addition to its attributes as a store of value, the
case for investing in gold revolves around the role it can play as a portfolio
diversifier.
Stock Market – Indian stock markets particularly the BSE and the NSE, had
been a preferred destination not only for the Indian investors but also for the
Foreign investors. This is evident from the fact that FIs are buying huge
stakes on the Indian bourses. Although Indian Markets had been through
tough times due to various scams, but history shows that they recovered
very fast. Many types of scrip had been value creators for the investors.
People have earned fortunes from the stock markets, but there are people
who have lost everything due to incorrect timings or selection of
fundamentally weak companies.
Real Estate
Approximately one fourth of all homes sold in 2006 have been purchased as
an investment. Returns are almost guaranteed because property values are
always on the rise due to a growing world population. Residential real estate
is more than just an investment. There are more ways than ever before to
profit from real estate investment.
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Mutual Funds - There is a collection of investors in Mutual funds that have

professional fund managers that invest in the stock market collectively on
behalf of investors. Mutual funds offer a better route to investing in equities
for lay investors. A mutual fund acts like a professional fund manager,
investing the money and passing the returns to its investors. All it deducts is
a management fee and its expenses, which are declared in its offer
document.
Unit Linked Insurance Plans - ULIPs are remarkably alike to mutual funds
in terms of their structure and functioning; premium payments made are
converted into units and a net asset value (NAV) is declared for the same. In
traditional insurance products, the sum assured is the corner stone; in ULIPs
premium payments is the key component.
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A Glance on the standpoint of Investors
Risk tolerance, Investors point of view is the most important factor to

consider before investing in any of the investmnet pool. Thus to stumble on
the Risk, investment duration, time horizon, job, age and income
relation, a survey was conducted asking questions targeting our point that
was to analyze the investors investing strategies, risk avertness etc.
Primary data which was congregated by a Survey with a survey sample of
50.
The Graphs shows the investment and other factors Relations:
Risk versus Income

Fig
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Analysis
100% of the investors of Income group 1-2 Lakh invest in low Risk Schemes,
i.e they invest their money for longer time. 40% invest in Low and 60%
invest in Medium Risk level Schemes in income group of 2-3 Lakh. Under
income group of 3-5 Lakh 22% invest in High risk oriented schemes, 33% in
Low Risk oriented schemes and 44% in Medium Risk oriented schemes. In
High income group of 5-8 Lakh 33% of the investors invest in High Risk
oriented schemes, 44% in Medium Risk oriented scheme and 22% in low risk
oriented schemes. The highest income level group in the survey does not
invest in low Risk schemes while maximum of them invest in Medium Risk
level (66%) and rest 44% invest in High risk level schemes.
Income Vs Investment
Fig
Analysis
Investors with high income Level can invest more sums per month than as
compared to the lower Income level investors. 100% of the investors in
income group of 1-2 Lakh can invest 1-5 thousand, 50% Investors in income
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group of 2-3 Lakh can invest 1-5 thousand and 50% can invest 5-10
thousand. 11.1% of Investors in income group of 3-5 Lakh can invest 1-5
thousand and rest invests 5-10 thousand monthly. Higher income group
invests more per month
Risk Vs Job
Fig
Fig.
Analysis
Through the survey it was established that Self employed are less Risk
oriented and thus prefer least riskier Investments, thus can go for Long term
Investments. 60% of self employed investors prefer Low risk investments
and rest 20% each in low and high risk oriented schemes. The Private
Service category ones are Medium risk oriented. 30% are risk averted,55%
are medium risk bearing category and 15% are high risk bearing ones. Even
the governmnet employed investors are low risk oriented ones. 50% of them
invest in low risk schemes, 25% eacg in high and medium risky schemes.
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Risk Vs Age
Fig
Analysis
Under Age group of 20-25 18.18% invests in low risk schemes, 63.63% in
Medium risk while 18.18% in high risk oriented schemes. Under age group of
26-30, 16.66% prefer low risk, 50% prefer medium and 33.33% prefer high
risk. While 66% of highest group age invest in Low Risk Level schemes and
rest invests in medium one. Thus we see that if age alone is considered to
judge the risk factors, the risk bearing potential decreases with increase in
age.
Thus according to his/her risk avertness the investors can look upon the
appropriate schemes for them and can invest into accordingly.
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Income Vs purpose of Investments
Maximum number of the investors are opting the Life insurance investments
and for the Tax Saving Investments. Specifically low income group are
heading for these two options only, but the higher income group investors
still going for child care and health insurance.
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Age Vs Investment
Younger age investors are showing more variation in the data about 65% of
them is showing 5-10000 investment per month. Medium age group
investors are more interested in low investment per month. While higher age
group again showing variations with maximum in 5- 10000 and above 20000
investment per month.
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Age Vs Horizon of Time
The young investors for apparent reasons are investing in for higher duration
while the investors under high age group are investing in relatively less
durations. The investors in medium age are more interested in gaining quick
returns for one reason could be their ongoing expenditure requirements.
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Age Vs Purpose of Investments
62% of the young investors are opting the tax saving investments while45%
are opting for Life insurance and age group of 40-50 are majorly opting for
tax saving while the investors in highest age group of our survey preffered
mostly Life insurance investments for them.
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Purpose of Investment Vs Horizon of Time
Investments for the purpose of Tax Savings are distributed over almost all
horizon of time like 11-15 years, 6-10years, 1-2 years etc. according to the
requiremnets of the investors. While the Life Insurance purpose investments
grab attention for 21-35 years and 11-15 years.
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SAVINGS ACCOUNT
An account primarily opened for and operated by individuals, wherein the

numbers of transactions are few and which give the customer liquidity, with
the facility to earn some interest on the residual balances.
Standard Chartered bank offers 4 types of Savings account matching

different needs of customers namely:
1. Axcess Plus :The Standard Chartered Bank have launched the Axcess Plus
saving account as a premium product placed in the market with
maintenance of minimum quarterly balance of 10,000/- The product is
supposed to be targeted to a specific group elite of customers. This will
help to increase the volume and as such the profitability of the company.
The name axcess plus means that the account is accessible anywhere
anytime, as well as it will be an innovative and convenient services for
the customers needs.
2. Super Value
3. Parivaar account
4. Saral Account
ELIGIBILITY (IN GENERAL)
• Indian Residents
• NRI’s
• Clubs, Associations, Trusts and Registered Societies
• HUF (Hindu Undivided Family)
• Foreign Nationals (QA-22)
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PRODUCT FEATURES (IN GENERAL)
• Account can be in sole name or in joint names
• Minimum balance: Minimum Quarterly balance of a specific

amount is to be maintained failing to which a specific fees per quarter has
to be paid.
• Account can be operated at any branch across the country.
The details are in the table shown in AnnexureI and AnnexureII.
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ULIP-Unit Linked insurance Plan
ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life

insurance policy which provides a combination of risk cover and investment.
The dynamics of the capital market have a direct bearing on the
performance of the ULIPs.
It provides for life insurance where the policy value at any time varies
according to the value of the underlying assets at the time. ULIP is life
insurance solution that provides for the benefits of protection and flexibility
in investment. The investment is denoted as units and is represented by the
value that it has attained called as Net Asset Value (NAV).
ULIP came into play in the 1960s and is popular in many countries in the
world. The reason that is attributed to the wide spread popularity of ULIP is
because of the transparency and the flexibility which it offers.
As times progressed the plans were also successfully mapped along with life
insurance need to retirement planning. In today’s times, ULIP provides
solutions for insurance planning, financial needs, financial planning for
children’s future and retirement planning. These are provided by the
insurance companies or even banks. Investments made in ULIP has tax
exemption under section 80C of the Indian Income Tax Act, 1961 and also
returns will be covered under section 10(10D).
Most insurers offer a wide range of funds to suit one’s investment objectives,
risk profile and time horizons. Different funds have different risk profiles. The
potential for returns also varies from fund to fund.
The following are some of the common types of funds available along with
an indication of their risk characteristics.
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General Nature of Investments Risk Category

Description
Equity Funds Primarily invested in company Medium to High
stocks with the general aim of
capital appreciation
Income, Fixed Invested in corporate bonds, Medium
Interest and government securities and other
Bond Funds fixed income instruments
Cash Funds Sometimes known as Money Market Low
Funds — invested in cash, bank
deposits and money market
instruments
Balanced Combining equity investment with Medium
Funds fixed interest instruments
ULIP provides multiple benefits to the consumer. The benefits include:
• Life protection
• Investment and Savings
• Flexibility
• Adjustable Life Cover
• Investment Options
• Transparency
• Options to take additional cover against
• Death due to accident
• Disability
• Critical Illness
• Surgeries
• Liquidity
• Tax planning
Market linked insurance plans invest the premium in to the equity, debt and
cash markets by the way of allocating units, which like any other mutual
fund have a NAV and the customer is free to switch between one fund class
to another depending on the risk factor he wishes to be in. ULIPs offer a
better return than the traditional endowment plans and offer a great deal of
flexibility along with great returns making them the finest product offering.
35
Charges
ULIPs offered by different insurers have varying charge structures. Broadly,

the different types of fees and charges are given below. However it may be
noted that insurers have the right to revise fees and charges over a period of
time.
1 Premium Allocation Charge
This is a percentage of the premium appropriated towards charges before

allocating the units under the policy. This charge normally includes initial and
renewal expenses apart from commission expenses.
2 Mortality Charges
These are charges to provide for the cost of insurance coverage under the
plan. Mortality charges depend on number of factors such as age, amount of
coverage, state of health etc
3 Fund Management Fees
These are fees levied for management of the fund(s) and are deducted
before arriving at the Net Asset Value (NAV).
4 Policy/ Administration Charges
These are the fees for administration of the plan and levied by cancellation
of units. This could be flat throughout the policy term or vary at a pre-
determined rate.
5 Surrender Charges
A surrender charge may be deducted for premature partial or full

encashment of units wherever applicable, as mentioned in the policy
conditions.
6 Fund Switching Charge
Generally a limited number of fund switches may be allowed each year

without charge, with subsequent switches, subject to a charge.
36
7 Service Tax Deductions
Before allotment of the units the applicable service tax is deducted from the
risk portion of the premium.
Investors may note that the portion of the premium after deducting for all
charges and premium for risk cover is utilized for purchasing units.
Important Issues for Investors
Verification Before signing in the proposal
One has to verify the approved sales brochure for
• All the charges deductible under the policy
• Payment on premature surrender
• Features and benefits
• Limitations and exclusions
• Lapsation and its consequences
• Other disclosures
• Illustration projecting benefits payable in two scenarios of 6% and 10%

returns as prescribed by the life insurance council.
Premium Used to Purchase Units
The full amount of premium paid is not allocated to purchase units. Insurers
allot units on the portion of the premium remaining after providing for
various charges, fees and deductions. However the quantum of premium
used to purchase units varies from product to product.
The total monetary value of the units allocated is invariably less than the
amount of premium paid because the charges are first deducted from the
premium collected and the remaining amount is used for allocating units.
Bajaj Allianz Life Insurance have developed a number of ULIP products
which range from single premium to a regular premium option along with
37
investment funds ranging from index funds to mid-cap funds and debt
market linked funds.
Refund of premiums if not satisfied with the policy, after purchasing

it
The policyholder can seek refund of premiums if he disagrees with the terms
and conditions of the policy, within 15 days of receipt of the policy document
(Free Look period). The policyholder shall be refunded the fund value
including charges levied through cancellation of units subject to deduction of
expenses towards medical examination, stamp duty and proportionate risk
premium for the period of cover.
To invest additional contribution above the regular premium
One can invest additional contribution over and above the regular premiums
as per their choice subject to the feature being available in the product. This
facility is known as “TOP UP” facility.
Switching the investment fund after taking a ULIP policy
“SWITCH” option provides for shifting the investments in a policy from one
fund to another provided the feature is available in the product. While a
specified number of switches are generally effected free of cost, a fee is
charged for switches made beyond the specified number.
Partial encashment/withdrawal
Products may have the “Partial Withdrawal” option which facilitates

withdrawal of a portion of the investment in the policy. This is done through
cancellation of a part of units.
Discontinuation of payment of premium
a) Discontinuance within three years of commencement – If all the

premiums have not been paid for at least three consecutive years from
inception, the insurance cover shall cease immediately. Insurers may
give an opportunity for revival within the period allowed; if the policy
is not revived within that period, surrender value shall be paid at the
38
end of third policy anniversary or at the end of the period allowed for
revival, whichever is later.
b) Discontinuance after three years of commencement -- At the end of

the period allowed for revival, the contract shall be terminated by paying the
surrender value. The insurer may offer to continue the insurance cover, if so
opted for by the policy holder, levying appropriate charges until the fund
value is not less than one full year’s premium. When the fund value reaches
an amount equivalent to one full year’s premium, the contract shall be
terminated by paying the fund value.
ULIP – STANDARD CHARTERED
The flexible Unit linked life insurance plans at Standard Chartered bank
provides the opportunity to participate in market-linked returns while
enjoying the valuable benefits of life insurance. Insurance Plans for Standard
Chartered Bank customers is issued by Bajaj Allianz Life Insurance Company
Limited.
Bajaj Allianz
Bajaj Allianz Life Insurance Company Limited is a Union between Allianz SE,
one of the world’s largest Life Insurance companies and Bajaj Auto, one of
the biggest 2- &- 3 wheeler manufacturers in the world.
Allianz SE is a leading insurance conglomerate globally and one of the
largest asset managers in the world, managing assets worth over a Trillion
Euros (Over R. 55, 00,000 crores). Allianz SE has over 115 years of financial
experience in over 70 countries.
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years.
At Bajaj Allianz customer delight is our guiding principle. Ensuring world-
class solutions by offering customized products with transparent benefits,
supported by best technology is our business philosophy.
39
to another depending on the risk factor he wishes to be in. ULIPs offer a
better return than the traditional endowment plans and offer a great deal of
We at Bajaj Allianz Life Insurance have developed a number of ULIP
products which range from single premium to a regular premium option
along with investment funds ranging from index funds to mid-cap funds and
debt market linked funds.
CAPITAL UNIT GAIN – A UNIT LINKED PLAN:

Capital UnitGain is a unit linked endowment regular premium plan with the
benefit of life protection offered by Bajaj Allianze. By choosing an
appropriate premium level and term, individual can match the maturity date
of the plan to a specific savings need such as child’s education, wedding,
retirement etc. It has unmatched flexibility to meet any emergency or any
financial need.
Bajaj Allianz Capital UnitGain gives up to 97% allocation from the first year
onwards to ensure that your investment income gets accelerated from the
first year itself. With Bajaj Allianz Capital UnitGain one can get to choose
from a wide range of high quality investment funds coupled with flexible
investment management. This is the one-stop solution to investment, tax-
saving and protection needs.
The Key Features of the Capital UnitGain Plan are:

• Option of choosing any sum assured between minimum and maximum
limits to match insurance needs.
40
• Option of choosing from a host of additional rider benefits: UL Accidental

Death Benefit, UL Accidental Permanent Total/Partial Disability Benefit, UL
Critical Illness
Benefit and UL Hospital Cash Benefit
• Increase savings by paying top up premiums.
• Same premium allocation for all policy years with higher allocation for top
up premiums.
• Individuals choice of adopting own investment strategy to grow the funds
under the policy.
• Choice of 5 investment funds with flexible investment management, with
the option of changing funds at any time and also invest in the newer funds
that would be introduced from time to time.
• Partial withdrawals without any surrender charges.
• Flexibility to increase / decrease the regular premiums
Regular Premium
to another depending of the risk factor he wishes to be in. ULIPs offer better
returns than the traditional endowment plans and offer a great deal of
We at Bajaj Allianz Life Insurance have developed a number of ULIP
products which range from single premium to a regular premiums option
along with investment funds ranging from index funds to mid-cap funds and
debt market linked funds.
New UnitGain Supper
Ensure fully and get MAX allocation along with a host of additional benefits
to choose from.
A flexible unit linked plan that allows partial & full withdrawal after 3 years.
41
Additional benefits:
 UL Accidental Death Benefit and UL Disability Benefit.

 UL Critical Illness Benefit and UL Hospital Cash Benefit.
 3 funds to choose from & flexibility to pay top-up any time.
Unit Gain plus Gold

A Unique plan with the combination of protection and prospects of earning
attractive returns with investments in various mixes of securities that makes a
perfect plan to last you a lifetime of prosperity and happiness.
High Allocation upto 85%.
Guaranteed Life Cover with a choice of 6 Investmenst Funds.
Additional Benefit Riders:
 UL Accidental Death Benefit.

 UL Critical Illness benefit.
 UL Hospital Cash Benefit.
 UL Family Income Benefit.
 UL Waiver of Premium benefit.
New FamilyGain
A Flexible Investment plan with Pure Stock Fund- (a unique ethical fund that
invests in environment responsive companies and also suits religious
guidelines.)
 Guaranteed Life Cover: Sum Assured + Value of Units.

 Partial and full withdrawals after 3 years.
 UL Accidental Death Benefit and UL Accidental Permanent Total/Partial
Disability Benefit.
 UL Critical Illness Benefit and UL Hospital Cash Benefit.
 UL Family Income benefit and UL Waiver of Premium Benefit.
New UnitGain Plus

Flexible investment plans with an option of withdrawing money whenever
needed.
 Guaranteed life cover.

 Choice of 5 investment funds.
 3 free switches allowed every year.
 Partial and full withdrawls after 3 years.
42
 Unmatched flexibility to meet your changing lifestyle and insurance

requirements.
Century Plus
A limited premium payment term option with a unique combination of
protection and attractive returns.
 98% allocation in year 1 and year 2 and 100% allocation 3rd year onwards.
 Guaranteed life cover with twin-benefits of sum assured plus fund value.
 Get Loyalty Units of 7% annualised premium from sixth year onwards.
 Additional 0.25% Loyalty Units on regular premium fund value for annual
premium equal to or above Rs. 1 Lac
New UnitGain
An investment plan that creates value for every rupee you invest.
YoungCare
Bajaj Allianz YoungCare offers you a unique way to reassure yourself that you
have taken care of the ones you cherish. This investment plan is a Gift of a
lifetime to your loved one, as it offers a guaranteed Sum Assured and
continued pay premium on your behalf, in case of your unfortunate death.
YoungCare Plus
Bajaj Allianz YoungCare Plus offers you a unique way to reassure yourself that
you have taken care of the ones you cherish. This investment plan is a Gift of a
lifetime to your loved one, as it offers a guaranteed Sum Assured, continued
pay premium on your behalf, in case of your unfortunate death and critical
illness benefit.
Single Premium
Unit Linked Single Premium Plans require the premium to be paid only once.
New UnitGain Premier SP
New UnitGain Premier SP is an unique insurance cum investment plan that
provides your investment a zing from the start, by allocating 105% of the
single premium paid from day one, thereby ensuring that you get MORE.
 105% allocation.
 Guaranteed life cover.
 Flexible withdrawal option u/s 10 (10) D.
New UnitGain Plus SP
The Only Single premium plan that gives you Maxx Allocation
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 98% Allocation.
 Guaranteed Life Cover.
 Choice of 4 Investment funds.
 3 free switches allowed everyear.
 Partialand Full withdrawls after 3 years.
 Now minimum premium as low as Rs10,000 only.
MUTUAL FUNDS
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other securities.
The income earned through these investments and the capital appreciation
realised are shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the
44
common man as it offers an opportunity to invest in a diversified,

professionally managed basket of securities at a relatively low cost. The flow
chart below describes broadly the working of a mutual fund:
Mutual Fund Operation Flow Chart
ORGANISATION OF A MUTUAL FUND
There are many entities involved and the diagram below illustrates the
organisational set up of a mutual fund
Mutual funds
Mutual fund is vehicle that facilitates a number of investors to pool their
money and have it jointly managed by a professional money manager
45
Sponsor
Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. The Sponsor is not responsible or liable
for any loss or shortfall resulting from the operation of the Schemes beyond
the initial contribution made by it towards setting up of the Mutual Fund.
Trustee
Trustee is usually a company (corporate body) or a Board of Trustees (body
of individuals). The main responsibility of the Trustee is to safeguard the
interest of the unit holders and ensure that the AMC functions in the interest
of investors and in accordance with the Securities and Exchange Board of
India (Mutual Funds) Regulations, 1996.
Asset Management Company (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the
Mutual Fund. At least 50% of the directors of the AMC are independent
directors who are not associated with the Sponsor in any manner. The AMC
must have a net worth of at least 10 crores at all times.
Transfer Agent
The AMC if so authorised by the Trust Deed appoints the Registrar and
Transfer Agent to the Mutual Fund. The Registrar processes the application
form, redemption requests and dispatches account statements to the unit
holders. The Registrar and Transfer agent also handles communications with
investors and updates investor records.
46
Regulatory Authorities
To protect the interest of the investors, SEBI formulates policies and

regulates the mutual funds. It notified regulations in 1993 (fully revised in
1996) and issues guidelines from time to time. MF either promoted by public
or by private sector entities including one promoted by foreign entities is
governed by these Regulations.
SEBI approved Asset Management Company (AMC) manages the funds by

making investments in various types of securities. Custodian, registered with
SEBI, holds the securities of various schemes of the fund in its custody.
According to SEBI Regulations, two thirds of the directors of Trustee

Company or board of trustees must be independent.
The Association of Mutual Funds in India (AMFI) reassures the investors in

units of mutual funds that the mutual funds function within the strict
regulatory framework. Its objective is to increase public awareness of the
mutual fund industry.
AMFI also is engaged in upgrading professional standards and in promoting

best industry practices in diverse areas such as valuation, disclosure,
transparency etc.
47
MUTUAL FUNDS
The flow chart below describes broadly the working of a mutual fund:
CONCEPT OF MUTUAL FUNDS
TYPES OF MUTUAL FUND SCHEMES
Wide varieties of Mutual Fund Schemes exist to cater to the needs such as
financial position, risk tolerance and return expectations etc. The table below
gives an overview into the existing types of schemes in the Industry.
48
BY STRUCTURE
1. Open - Ended Schemes:
An open-end fund is one that is available for subscription all through the
year. These do not have a fixed maturity. Investors can conveniently buy
and sell units at Net Asset Value ("NAV") related prices. The key feature of
open-end schemes is liquidity.
2. Close - Ended Schemes:
A closed-end fund has a stipulated maturity period which generally ranging

from 3 to 15 years. The fund is open for subscription only during a specified
period. Investors can invest in the scheme at the time of the initial public
issue and thereafter they can buy or sell the units of the scheme on the
stock exchanges where they are listed. In order to provide an exit route to
the investors, some close-ended funds give an option of selling back the
units to the Mutual Fund through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that at least one of the two exit routes is provided
to the investor.
3. Interval Schemes:
49
Interval Schemes are that scheme, which combines the features of open-
ended and close-ended schemes. The units may be traded on the stock
exchange or may be open for sale or redemption during pre-determined
intervals at NAV related prices.
By investment objective:
Growth Schemes: Growth Schemes are also known as equity schemes. The
aim of these schemes is to provide capital appreciation over medium to long
term. These schemes normally invest a major part of their fund in equities
and are willing to bear short-term decline in value for possible future
appreciation.
Income Schemes: Income Schemes are also known as debt schemes. The
aim of these schemes is to provide regular and steady income to investors.
These schemes generally invest in fixed income securities such as bonds and
corporate debentures. Capital appreciation in such schemes may be limited.
Balanced Schemes: Balanced Schemes aim to provide both growth and

income by periodically distributing a part of the income and capital gains
they earn. These schemes invest in both shares and fixed income securities,
in the proportion indicated in their offer documents (normally 50:50).
Money Market Schemes: Money Market Schemes aim to provide easy

liquidity, preservation of capital and moderate income. These schemes
generally invest in safer, short-term instruments, such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money.
50
The risk return trade-off indicates that if investor is willing to take higher risk
then correspondingly he can expect higher returns and vise versa if he
pertains to lower risk instruments, which would be satisfied by lower
returns. For example, if an investors opt for bank FD, which provide
moderate return with minimal risk. But as he moves ahead to invest in
capital protected funds and the profit-bonds that give out more return which
is slightly higher as compared to the bank deposits but the risk involved also
increases in the same proportion.
Thus investors choose mutual funds as their primary means of investing, as

Mutual funds provide professional management, diversification, convenience
and liquidity. That doesn’t mean mutual fund investments risk free. This is
because the money that is pooled in are not invested only in debts funds
which are less riskier but are also invested in the stock markets which
involves a higher risk but can expect higher returns. Hedge fund involves a
very high risk since it is mostly traded in the derivatives market which is
considered very volatile.
BY NATURE
1. Equity fund:
These funds invest a maximum part of their corpus into equities holdings.
The structure of the fund may vary different for different schemes and the
51
fund manager’s outlook on different stocks. The Equity Funds are sub-
classified depending upon their investment objective, as follows:
• Diversified Equity Funds.

• Mid-Cap Funds.
• Sector Specific Funds.
• Tax Savings Funds (ELSS).
Equity investments are meant for a longer time horizon, thus Equity
funds rank high on the risk-return matrix.
2. Debt funds:
The objective of these Funds is to invest in debt papers. Government

authorities, private companies, banks and financial institutions are some of
the major issuers of debt papers. By investing in debt instruments, these
funds ensure low risk and provide stable income to the investors. Debt funds
are further classified as:
Gilt Funds: Invest their corpus in securities issued by Government,

popularly known as Government of India debt papers. These Funds carry
zero Default risk but are associated with Interest Rate risk. These schemes
are safer as they invest in papers backed by Government.
Income Funds: Invest a major portion into various debt instruments such
as bonds, corporate debentures and Government securities.
MIPs: Invests maximum of their total corpus in debt instruments while they
take minimum exposure in equities. It gets benefit of both equity and debt
market. These scheme ranks slightly high on the risk-return matrix when
compared with other debt schemes.
Short Term Plans (STPs): Meant for investment horizon for three to six
months. These funds primarily invest in short term papers like Certificate of
Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is
also invested in corporate debentures.
Liquid Funds: Also known as Money Market Schemes, These funds provides
easy liquidity and preservation of capital. These schemes invest in short-
term instruments like Treasury Bills, inter-bank call money market, CPs and
CDs. These funds are meant for short-term cash management of corporate
houses and are meant for an investment horizon of 1day to 3 months. These
schemes rank low on risk-return matrix and are considered to be the safest
amongst all categories of mutual funds.
52
3. Balanced funds:
As the name suggest they, are a mix of both equity and debt funds. They
invest in both equities and fixed income securities, which are in line with
pre-defined investment objective of the scheme. These schemes aim to
provide investors with the best of both the worlds. Equity part provides
growth and the debt part provides stability in returns.
Further the mutual funds can be broadly classified on the basis of investment
parameter viz,
Each category of funds is backed by an investment philosophy, which is pre-

defined in the objectives of the fund. The investor can align his own
investment needs with the funds objective and invest accordingly.
Types of returns
There are three ways, where the total returns provided by mutual funds can
be enjoyed by investors.
Income is earned from dividends on stocks and interest on bonds. A fund
pays out nearly all income it receives over the year to fund owners in the
form of a distribution.
If the fund sells securities that have increased in price, the fund has a capital
gain. Most funds also pass on these gains to investors in a distribution.
If fund holdings increase in price but are not sold by the fund manager, the
fund's shares increase in price. You can then sell your mutual fund shares for
a profit. Funds will also usually give you a choice either to receive a check
for distributions or to reinvest the earnings and get more shares.
Advantages of Investing Mutual Funds:
1. Professional Management - The basic advantage of funds is that, they

are professional managed, by well qualified professional. Investors purchase
funds because they do not have the time or the expertise to manage their
own portfolio. A mutual fund is considered to be relatively less expensive
way to make and monitor their investments.
53
2. Diversification - Purchasing units in a mutual fund instead of buying

individual stocks or bonds, the investors risk is spread out and minimized up
to certain extent. The idea behind diversification is to invest in a large
number of assets so that a loss in any particular investment is minimized by
gains in others.
3. Economies of Scale - Mutual fund buy and sell large amounts of

securities at a time, thus help to reducing transaction costs, and help to
bring down the average cost of the unit for their investors.
4. Liquidity - Just like an individual stock, mutual fund also allows investors
to liquidate their holdings as and when they want.
5. Simplicity - Investments in mutual fund is considered to be easy,

compare to other available instruments in the market, and the minimum
investment is small. Most AMC also have automatic purchase plans whereby
as little as Rs. 2000, where SIP start with just Rs.50 per month basis.
Disadvantages of Investing Mutual Funds:
1. Professional Management- Some funds doesn’t perform in neither the

market, as their management is not dynamic enough to explore the available
opportunity in the market, thus many investors debate over whether or not
the so-called professionals are any better than mutual fund or investor him
self, for picking up stocks.
2. Costs – The biggest source of AMC income, is generally from the entry &
exit load which they charge from an investors, at the time of purchase. The
mutual fund industries are thus charging extra cost under layers of jargon.
3. Dilution - Because funds have small holdings across different companies,

high returns from a few investments often don't make much difference on
the overall return. Dilution is also the result of a successful fund getting too
big. When money pours into funds that have had strong success, the
manager often has trouble finding a good investment for all the new money.
4. Taxes - when making decisions about your money, fund managers don't
consider your personal tax situation. For example, when a fund manager
sells a security, a capital-gain tax is triggered, which affects how profitable
the individual is from the sale. It might have been more advantageous for
the individual to defer the capital gains liability.
54
THE MUTUAL FUNDS INDUSTRY
The mutual fund industry in india started in 1963 with the formation of unit
trust of india, at the initiative of the government of india and reserve bank
the. the history of mutual funds in india can be broadly divided into four
distinct phases
First phase – 1964-87
Unit trust of India (uti) was established on 1963 by an act of parliament. it

was set up by the reserve bank of india and functioned under the regulatory
and administrative control of the reserve bank of india. in 1978 uti was de-
linked from the rbi and the industrial development bank of india (idbi) took
over the regulatory and administrative control in place of rbi. the first
scheme launched by uti was unit scheme 1964. at the end of 1988 uti had
rs.6,700 crores of assets under management.
Second phase – 1987-1993 (entry of public sector funds)
1987 marked the entry of non- uti, public sector mutual funds set up by
public sector banks and life insurance corporation of india (lic) and general
insurance corporation of india (gic). sbi mutual fund was the first non- uti
mutual fund established in june 1987 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
established its mutual fund in June 1989 while gic had set up its mutual fund
in December 1990.
At the end of 1993, the mutual fund industry had assets under management
of rs.47, 004 crores.
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 uti 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.
55
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. 121,805crores. The unit trust of
india with rs.44, 541 crores of assets under management was way ahead of
other mutual funds.
Fourth phase – since February 2003
In February 2003, following the repeal of the unit trust of india act 1963 uti
was bifurcated into two separate entities. one is the specified undertaking of
the unit trust of india with assets under management of rs.29,835 crores as
at the end of january 2003, representing broadly, the assets of us 64
scheme, assured return and certain other schemes. the specified
undertaking of unit trust of india, functioning under an administrator and
under the rules framed by government of india and does not come under the
purview of the mutual fund regulations.
The second is the uti mutual fund ltd, sponsored by sbi, pnb, bob and lic. it
is registered with sebi and functions under the mutual fund regulations. with
the bifurcation of the erstwhile uti which had in march 2000 more than
rs.76,000 crores of assets under management and with the setting up of a
uti mutual fund, conforming to the sebi mutual fund regulations, and with
recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and
growth. as at the end of september, 2004, there were 29 funds, which
manage assets of rs.153108 crores under 421 schemes.
56
The graph indicates the growth of assets over the years
RESEARCH ON MUTUAL FUNDS
Mutual Funds over the years have gained immensely in their popularity.
Apart from the many advantages that investing in mutual funds provide like
diversification, professional management, the ease of investment process
has proved to be a major enabling factor. However, with the introduction of
innovative products, the world of mutual funds nowadays has a lot to offer to
its investors. With the introduction of diverse options, investors needs to
choose a mutual fund that meets his risk acceptance and his risk capacity
levels and has similar investment objectives as the investor.
With the plethora of schemes available in the Indian markets, an investors

needs to evaluate and consider various factors before making an investment
decision. Since not everyone has the time or inclination to invest and do the
analysis himself, the job is best left to a professional. Since Indian economy
is no more a closed market, and has started integrating with the world
57
markets, external factors which are complex in nature affect us too. Factors
such as an increase in short-term US interest rates, the hike in crude prices,
or any major happening in Asian market have a deep impact on the Indian
stock market. Although it is not possible for an individual investor to
understand Indian companies and investing in such an environment, the
process can become fairly time consuming. Mutual funds (whose fund
managers are paid to understand these issues and whose Asset Management
Company invests in research) provide an option of investing without getting
lost in the complexities.
Most importantly, mutual funds provide risk diversification: diversification of

a portfolio is amongst the primary tenets of portfolio structuring, and a
necessary one to reduce the level of risk assumed by the portfolio holder.
Most of the investors are not necessarily well qualified to apply the theories
of portfolio structuring to their holdings and hence would be better off
leaving that to a professional. Mutual funds represent one such option.
Lastly, Evaluate past performance, look for stability and although past
performance is no guarantee of future performance, it is a useful way to
assess how well or badly a fund has performed in comparison to its stated
objectives and peer group. A good way to do this would be to identify the
few best performing funds (within your selected investment objectives) over
various periods, say 3 months, 6 months, one year, two years and three
years. Shortlist funds that appear in the top 5 in each of these time horizons
as they would have thus demonstrated their ability to be not only good but
also, consistent performers.
58
59
Analysis
The analysis on Risk and Return are done on the following basis:
Standard Deviation
Standard deviation is applied to the annual rate of return of an investment to

measure the investment's volatility. Standard deviation is also known as
historical volatility and is used by investors as a gauge for the amount of
expected volatility.
Standard deviation is a statistical measurement that sheds light on historical
volatility. For example, a volatile stock will have a high standard deviation
while the deviation of a stable blue chip stock will be lower. A large
dispersion tells us how much the return on the fund is deviating from the
expected normal returns.
Sharpe Ratio
The Sharpe ratio tells us whether a portfolio's returns are due to smart
investment decisions or a result of excess risk. This measurement is very
useful because although one portfolio or fund can reap higher returns than
its peers, it is only a good investment if those higher returns do not come
with too much additional risk. The greater a portfolio's Sharpe ratio, the
better its risk-adjusted performance has been.
Treynor’s performance index:
A ratio developed by Jack Treynor that measures returns earned in excess of

that which could have been earned on a riskless investment per each unit of
60
market risks.
In other words, the Treynor ratio is a risk-adjusted measure of return based

on systematic risk. It is similar to the Sharpe ratio, with the difference being
that the Treynor ratio uses beta as the measurement of volatility. :
R −R 
 P f 
Treynor = 
βP
Where:
Ti = Treynor’s performance index
Rp = Portfolio’s actual return during a specified time period
Rf = Risk-free rate of return during the same period
βp = beta of the portfolio
Whenever Rp> Rf and βp > 0 a larger T value means a better portfolio for all
investors regardless of their individual risk preferences. In two cases we may
have a negative T value: when Rp < Rf or when βp < 0. If T is negative
because Rp < Rf, we judge the portfolio performance as very poor. However,
if the negativity of T comes from a negative beta, fund’s performance is
superb. Finally when Rp- Rf, and βp are both negative, T will be positive, but
in order to qualify the fund’s performance as good or bad we should see
whether Rp is above or below the security market line.
The Investors for Mutual Fund
Mutual Funds are becoming a very popular form of investment characterised

by many advantages that they share with other forms of investments and
what they possess uniquely themselves. The primary objectives of an
61
investment proposal would fit into one or combination of the two broad
categories, i.e., Income and Capital gains. How mutual fund is expected to
be over and above an individual in achieving the two said objectives, is what
attracts investors to opt for mutual funds.
Mutual Funds are suitable for the investors who call for:
• Expertise Supervision: Making investments is not a full time

assignment of investors. So many investors hardly have a professional
attitude towards their investment. This investment is suitable for those
invetsors. When investors buy mutual fund scheme, an essential
benefit one acquires is expert management of the money he puts in
the fund. The professional fund managers who supervise fund’s
portfolio take desirable decisions viz., what scrips are to be bought,
what investments are to be sold and more appropriate decisions.
• Regular Income or Ease of Liquidity- A distinct advantage of

a mutual fund over other investments is that there is always a market
for its unit/ shares. Moreover, Securities and Exchange Board of India
(SEBI) requires the mutual funds in India have to ensure liquidity.
Mutual funds units can either be sold in the share market as SEBI has
made it obligatory for closed-ended schemes to list themselves on
stock exchanges. For open-ended schemes investors can always
approach the fund for repurchase at net asset value (NAV) of the
scheme. Such repurchase price and NAV is advertised in newspaper for
the convenience of investors as to timings of such buy and sell. They
have extensive research facilities at their disposal, can spend full time
to investigate and can give the fund a constant supervision. The
performance of mutual fund schemes, of course, depends on the
quality of fund managers employed.
62
• Risk reluctancy- Mutual funds are relatively safer and stable, the
reason being it provides Diversification which is the idea of putting
not putting all the eggs into one basket. By investing in many
companies the mutual funds can protect themselves from unexpected
drop in values of some shares. The small investors can achieve wide
diversification on his own because of many reasons, mainly funds at
his disposal. Mutual funds on the other hand, pool funds of lakhs of
investors and thus can participate in a large basket of shares of many
different companies. Majority of people consider diversification as the
major strength of mutual funds.
Risk in investment is as to recovery of the principal amount and as to
return on it. Mutual fund investments on both fronts provide a
comfortable situation for investors. The expert supervision,
diversification and liquidity of units ensured in mutual funds reduce the
risks. Investors are no longer expected to come to grief by falling prey
to misleading and motivating ‘headline’ leads and tips, if they invest in
mutual funds
• Safety of Investments-Besides depending on the expert

supervision of fund managers, the legislation in a country (like SEBI in
India) also provides for the safety of investments. Mutual funds have
to broadly follow the laid down provisions for their regulations, SEBI
acts as a watchdog and attempts whole heatedly to safeguard
investors interests
• Tax Shelter: Depending on the scheme of mutual funds, tax shelter

is also available. As per the Union Budget-2003, income earned
through dividends from mutual funds is 100% tax-free at the hands of
the investors.
63
• Minimize Operating Costs: Mutual funds having large invisible

funds at their disposal avail economies of scale. The brokerage fee or
trading commission may be reduced substantially. The reduced
operating cost visibly increases the income available for investors.
Investing in securities through mutual funds has many advantages like
– option to reinvest dividends, strong possibility of capital
appreciation, regular returns, etc
The test of their economic efficiency as financial intermediary lies in

the extent to which they are able to mobilize additional savings and
channeling to more productive sectors of the economy.
Taxation in India
64
India has a well developed tax structure with a three-tier federal structure,
comprising the Union Government, the State Governments and the
Urban/Rural Local Bodies. The power to levy taxes and duties is distributed
among the three tiers of Governments, in accordance with the provisions of
the Indian Constitution. The main taxes/duties that the Union Government is
empowered to levy are Income Tax (except tax on agricultural income,
which the State Governments can levy), Customs duties, Central Excise and
Sales Tax and Service Tax. The principal taxes levied by the State
Governments are Sales Tax (tax on intra-State sale of goods), Stamp Duty
(duty on transfer of property), State Excise (duty on manufacture of
alcohol), Land Revenue (levy on land used for agricultural/non-agricultural
purposes), Duty on Entertainment and Tax on Professions & Callings. The
Local Bodies are empowered to levy tax on properties (buildings, etc.),
Octroi (tax on entry of goods for use/consumption within areas of the Local
Bodies), Tax on Markets and Tax/User Charges for utilities like water supply,
drainage, etc.
Since 1991 tax system in India has under gone a radical change, in line with
liberal economic policy and WTO commitments of the country. Some of the
changes are:
• Reduction in customs and excise duties

• Lowering corporate Tax
• Widening of the tax base and toning up the tax
administration
Direct Taxes
Personal Income Tax
Individual income slabs are 0%, 10%, 20%, 30% for annual incomes upto
Rs 50,000, 50,000 – 60,000, 60,000 - 1,50,000 and above 1,50,000
respectively.
Corporate Income Tax
65
For domestic companies, this is levied @ 35% plus surcharge of 5%, where
as for a foreign company (including branch/project offices), it is @ 40% plus
surcharge of 5%. An Indian registered company, which is a subsidiary of a
foreign company, is also considered an Indian company for this purpose.
Depreciation and interest deductions:
Depreciation rates
Assets Rates (%)
Buildings 5-100
Plant and Machinery 25-100
Furniture and Fittings 15
Vehicles (Other than for commercial 20

use)
Pollution Control Equipment 80
Energy Saving Devices 80
Ships 25
Intangible assets 25
Withholding Tax for NRIs and Foreign Companies:
Withholding Tax Rates for payments made to Non-Residents are determined

by the Finance Act passed by the Parliament for various years. The current
rates are:
1. Interest - 20% of Gross Amount
2. Dividends - 10%
3. Royalties - 20%.
4. Technical Services - 20%.
66
5. Any other Services - Individuals - 30% of net income
Companies/Corporates - 40% of net income
The above rates are general and in respect of the countries with which India
does not have a Double Taxation Avoidance Agreement (DTAA).
Double Taxation Relief:
India has entered into DTAA with 65 countries including countries like
U.S.A., U.K., Japan, France, Germany, etc. These agreements provides for
relief from the double taxation in respect of incomes by providing exemption
and also by providing credits for taxes paid in one of the countries. These
treaties are based on the general principles laid down in the model draft of
the Organisation for Economic Cooperation and Development (OECD) with
suitable modifications as agreed to by the other contracting countries. In
case of countries with which India has double taxation avoidance
agreements, the tax rates are determined by such agreements and are
indicated for various countries as under:
General Tax Incentives for Industries:
• 100% deduction of profits and gains for ten years is

available in respect of the following:
o Any enterprise carrying on the business of

developing, maintaining and operating infrastructure
facilities viz., roads, highways, bridges, airports,
ports, rail systems, industrial towns, inland
waterways, water supply projects, water treatment
systems, irrigation projects, sanitation and sewage
projects, solid waste management systems.
o Undertakings engaged in generation or
generation and distribution, transmission or
distribution of power, which commence these
activities before 31.3.2006.
o Any company engaged in scientific and
industrial research and development activities,
approved by the prescribed authority, before
31.3.2003.
67
o Any undertaking which develops, operates,

maintains an Industrial Park or Special Economic
Zone before 31.3.2006.
o Notified Industrial Undertakings set up in the
North Eastern region including seven north-eastern
states and the state of Sikkim.
o Undertakings developing and building housing
projects approved by the local authority before
31.3.2001and which are completed before
31.3.2003.
• 100% deduction for seven years for undertakings

producing or refining mineral oil.
• 100% deduction from income for first five years and 30%
(for persons other than companies: 25%) in subsequent five
years is available in respect of the following:
o Company which starts providing

telecommunication services whether basic or cellular
including radio paging, domestic satellite service,
network or trunking, broad band network and
internet services before 31.3.2003.
o Industrial undertakings located in certain
specified industrially backward states and districts.
o Undertakings which begin to operate cold chain
facilities for agricultural produce before 31.3.2003.
o Undertakings engaged in the business of
handling, storage, transportation of food grains.
• 50% deduction for a period of five years is available to

undertakings engaged in the business of building, owning and
operating multiplex theatres or convention centres constructed
before 31.3.2005.
• Tax exemption of 100% on export profits for ten years
upto F.Y. 2009-10, for new industries located in EHTPs and STPs
and 100% Export Oriented Units. For units set up in Special
Economic Zones (SEZs), 100% deduction of export income for
first five years followed by 50% for next two years, even beyond
2009-10.
• Tax exemption of 100% of Export profits for ten years for
new industries located in Integrated Infrastructure Development
Centres or Industrial Growth Centres of the North Eastern
Region.
68
• Deduction of 50% of export profits from the gross total

income. The deduction would be restricted to 30% for financial
year 2003-04 and no deduction is allowable subsequently.
• Deduction from the gross total income of 50% of foreign
exchange earnings by hotels and tour operators. The deduction
would be restricted to 30% for financial year 2003-04 and no
deduction is allowable subsequently.
• 50% deduction of export income due to export of
computer software or film software, television software, music
software, from the gross total income. The deduction would be
restricted to 30% for financial year 2003-04 and no deduction is
allowable subsequently.
• Deduction in respect of certain inter-corporate dividends to
the extent of dividend declared.
• Exemption of any income by way of dividend, interest or
long term capital gains of an infrastructure capital fund or an
infrastructure capital company from investment made by way of
shares or long term finance in any enterprises carrying on the
business of developing, maintaining and operating infrastructure
facility.
Sales Tax
Central Sales Tax (CST)
CST is 4% on manufactured goods.
Local Sales Tax (LST)
Where a sale takes place within a state, LST would be levied. Such a tax
would be governed by the relevant state tax legislation. This is normally up
to 15%.
Excise Duty
Excise duty on most commodities ranges between 0 to 16%. Only on seven

items duty is imposed at 32%, viz., motor cars, tyres, aerated soft drinks,
air conditioners, polyesters filament yarn, pan masala and chewing tobacco.
Duty is charged at 30% on petrol with additional excise duty at Rs. 7 per
litre. The said rates are subject to exemptions and deductions thereon as
may be notified from time to time. Central VAT (CENVAT) is applicable to
practically all manufactured goods, so as to avoid cascading effect on duty.
69
Small Scale Sector is exempted from payment of excise duty from annual
production upto Rs.10 million.
Customs Duty
The rates of basic duties vary from 0 to 30%.
Salient features are:
o Peak customs duty reduced from 220% (in 1991) to 30%

(in 2002).
o The general project import duty (for new projects and
substantial expansion of existing projects) reduced from 85% to
25%.
o Import duty under EPCG Scheme is 5%.
o R&D imports - 5% customs duty.
o Export made with imported inputs get concessions in form
of duty drawback, duty entitlement pass book scheme and
advance licence.
o Many type of industries such as 100% EOU and units in
free trade zone get facility of zero import duty.
o An Authority for Advance Ruling for foreign investor.
70
Past Trend of Stocks
HCC
The stock
is
working consistently with no high and low spins. Thus is low risky stock. But
the retunrs from the stock has not augmented in the period.
Gammon India
The stock is risky one because of high variation in the value. But the overall
performance of the stock has improved.
71
IVRCL INFRA
The stock is performing pretty good thereby giving good returns. But the
performance is consistent with no high variations thus is risk averted one.
Nagarjuna const.
The stock is not performing well, as the returns are decreaing. The scheme
is moreover less risky scheme.
72
Punj Lloyd
The stock is performing average as compared to the other schemes. But the
returns have increased overall.
Simplex Infra
The stock has shown huge variation in the value thus is risky one, but the
returns are good as compared to the others.
73
Patel Eng.
The stock has declined in the value over the time. But since the variation is
less, the stock is for risk averted investors.
JP Associates
The stock is giving fewer returns as compared to the other ones and even
the variation in the value is verry high thus is a risky stock to invest into.
74
DLF
The stock is giving verry good returns as compared to the others but the
variation in the returns is verry high.
Tata Power
The stock is performing superiorly and is consantly increasing giving the

highest returns.
75
SAIL
The stock is consistent over the time period withnot fewer returns. And is
verry less risky because of less swing in the retuns.
C&C Const.
The returns of the stock are consistently increasing though the retunrns are
less but the stock is improving.
76
Unitech
The stock is not working well in the market the returns being reducing over
the time and is giving high deviations.
Tata Steel
The stock is performig good with returns increasing and the returns are
lessrisky because of less variations in the value.
77
LT
The market capitalization of the stock is verry large thus the overall returns
is verry lare as compared tpo the others. The retuns are almost consistent
over the time with less variations thus is less risky and high worth stock.
78
Annexure I
Saving accounts features:

Savings Account Name Accounts AXcessPlus Savings Account SuperValue Savings Account
CHARGES FOR OPENING THE ACCOUNT NIL NIL
AVERAGE QUARTERLY (DAILY)BALANCE REQD. Rs.10000 Rs 50,000
Rs. 1500/qtr (Bal<Rs.5000)
Rs.750/qtr(Rs.10000>Bal>Rs.50 Rs. 1250/qtr (Rs.5000<=Bal<10k)
PENALTY FOR UNSUFFICIENT AQB 00) Rs.1250/qtr(Rs.10000>Bal>Rs.5000)
DORMANT A/C CHARGES Rs.1000 per yr. Rs.1000 per yr.
ACCOUNT CLOSURE Rs.500 (within 6 months) Rs.500 (within 6 months)
DEMAND DRAFT
DRAWN AT OWN BANK(min fee Rs.50 & max
Rs.1500) 0.25% FREE
CANCELLATION Rs 250 Rs.250
DRAWN AT OTHER BANK( Min Fee Rs.250) 0.30% 0.25%
PAY ORDER Rs.75 FREE
STATEMENTS
STATEMENT OF ACCOUNT,(E-STMT) FREE/qtr FREE/qtr
CHARGES FOR DUPLICATE STATEMENT Rs.100 Rs.100
MONTHLY STATEMENT CHARGES Rs.100 FREE
ISSUE BALANCE CONFIRMATION CERTIFICATE Free for 1st Yr yr,250/yr Free for 1st Yr yr,250/yr
CARDS
DEBIT CARD ANNUAL FEE Rs.200 per year FREE
DEBIT CARD REPLACEMENT FEE Rs.200 Rs.200
Free for first 4 transactions per
ATM INTERCHANGE(NON PARTNER) month/ Rs.50 for beyond 4 trans.
SERVICES
NETBANKING FREE
INTERBRANCH/ INTERCITY BANKING Rs.50
BILLPAY FREE
PHONE BANKING FREE
MOBILE BANKING(SMS) NOT AVAILABLE
CHARGES FOR OPENING THE ACCOUNT NIL NIL
AVERAGE QUARTERLY (DAILY)BALANCE REQD. Rs.10000 Rs 50,000
Rs. 1500/qtr (Bal<Rs.5000)
Rs.750/qtr(Rs.10000>Bal>Rs.50 Rs. 1250/qtr (Rs.5000<=Bal<10k)
PENALTY FOR UNSUFFICIENT AQB 00) Rs.1250/qtr(Rs.10000>Bal>Rs.5000)
DORMANT A/C CHARGES Rs.1000 per yr. Rs.1000 per yr.
ACCOUNT CLOSURE Rs.500 (within 6 months) Rs.500 (within 6 months)
DEMAND DRAFT
DRAWN AT OWN BANK(min fee Rs.50 & max
Rs.1500) 0.25% FREE
CANCELLATION Rs 250 Rs.250
DRAWN AT OTHER BANK( Min Fee Rs.250) 0.30% 0.25%
PAY ORDER Rs.75 FREE
STATEMENTS
STATEMENT OF ACCOUNT,(E-STMT) FREE/qtr FREE/qtr
CHARGES FOR DUPLICATE STATEMENT Rs.100 Rs.100
MONTHLY STATEMENT CHARGES Rs.100 FREE
ISSUE BALANCE CONFIRMATION CERTIFICATE Free for 1st Yr yr,250/yr Free for 1st Yr yr,250/yr
CARDS
DEBIT CARD ANNUAL FEE Rs.200 per year FREE
DEBIT CARD REPLACEMENT FEE Rs.200 Rs.200
Free for first 4 transactions per
ATM INTERCHANGE(NON PARTNER) month/ Rs.50 for beyond 4 trans.
SERVICES
NETBANKING FREE
INTERBRANCH/ INTERCITY BANKING Rs.50
BILLPAY FREE
PHONE BANKING FREE
MOBILE BANKING(SMS) NOT AVAILABLE
79
Annexure II
Saving account comparison
Standard ABN AMBRO(flex plus)
Chartered(AXESSPLUS
SAVINGS A/C)
Average Quaterly Balance Rs. 10,000 10,000
(AQB)/ADB(average daily balance)
Charges on non maintainance of
balance Quaterly
AQB<Rs. 5000 Rs. 1,500 Rs. 500 p.m.
Rs. 5000<= AQB< Rs. 7,500 Rs. 1,250 Rs. 400 p.m.
Rs. 7,500<= AQB< Rs. 10,000 Rs. 750 Rs. 300 p.m.
GENERAL CHARGES
ACCOUNT STATEMENTS FREE free
QUATERLY STATEMENTS FREE Rs. 25
ADDITIONAL STATEMENTS (UPTO 6 Rs. 165 (FOR 1 MONTH
MONTHS) FREE)
HALF YEARLY STATEMENTS free
MONTHLY STATEMENTS FREE free
MONTHY E-STATEMENTS free
PAYEE DETAILS Rs. 200
PASS BOOK FREE
CHEQUE BOOK
PERSONALIZED CHEQUE BOOK FREE
MULTICITY CHEQUE BOOK FREE
ATM USAGE CHARGES
BANK's ATM's IN INDIA FREE 1st 4 TRANSACTIONS PER free
MONTH
OTHER VISA ATM's WITHIN INDIA Rs. 50 PER TRANSACTION Rs. 50 per transaction(MASTER
CARD/cirrus and UTI bank's
ATMs)
Balance enquiry Rs. 20 FREE ON ALL Rs. 5
TRANSACTIONS
withdrawal limit (non gold) Rs. 50000
withdrawal limit (gold) Rs. 100000
DEBIT CARD
ANNUAL FEES Rs. 200 Rs. 180
REPLACEMENT OF DEBIT CARD Rs. 100 Rs. 200
GOLD DEBIT CARD ANNUAL FEE Rs. 400
debit card spending limit(gold) Rs. 100000
DEBIT CARD SPENDING LIMIT (NON Rs. 50000
GOLD)
STANDING INSTRUCTIONS
Setting up Charges Rs. 100 Rs. 50
Execution fee Rs. 25
BANKER's REPORT Rs. 50 Rs. 250
Signature Verification Rs. 25 PER EXTERNAL DOCUMENT Rs. 50
TDS certificates free or Rs. 50 for
addition
OUTSTATION CHEQUE COLLECTION minimum Rs. 50 or .25%
CHEQUE DRAWN ON ANY OF OUR FREE
BRANCHES
CHEQUE DRAWN ON
ANOTHER BANK
OUR BRANCH LOCATIONS FREE
SPEED COLLECTION LOCATIONS Rs. 50
OTHER COLLECTION LOCATIONS 0.3% MINIMUM FEES OF
Rs. 150+OTHER ADDITIONAL
CHARGES
FOREIGN CURRENCY CHEQUE MINIMUM FEES Rs. 100 OR 0.25% minimum Rs. 150 or .
25%
HANDLING CHARGES FROM
80
OTHER BANKS
LOCAL CURRENCY CHEQUE Rs. 50
COLLECTION
FOREIGN CURRENCY CHEQUE Rs. 100
COLLECTION
REMITTANCES
NATIONAL ELECTRONIC
FUND TRANSFER
INWARD FREE minimum Rs 150 or .
25% (to correspondent banks)
OUTWARD FREE
REAL TIME GROSS
SETTLEMENT TRANSFER
INWARD Rs. 100 0.25%
OUTWARD (MIN. Rs. 250, MAX 0.25% 0.25%
Rs. 1000)
PAY ORDER/DD DRAWN ON FREE UPTO 2 PER Rs. 50
OUR BRANCHES MONTH(MIN FEE Rs. 50 MAX Rs.
1500 OR 0.10%)
DD DRAWN ON 0.15% minimum Rs. 50 or .25%
CORROSPONDENT BANKS
FOREIGN CURRENCY DD Rs. 750 Rs. 200
CANCELLATION/REVALIDAT Rs. 50
ION
DD/DEMAND ORDER Rs. 250
LOST/DUPLICATE INSTRUMENT Rs. 250+ BANK CHARGES
EXTRA
FUNDS TRANSFER
TRANSMISSION IN FOREIGN Rs. 250
CRRENCY
REMITTANCES UPTO USD Rs. 500
50,000 OR EQUIVALENT
REMITTANCES ABOVE USD Rs. 1000
50,000 OR EQUIVALENT
REMITANCES FROM ABROAD Rs. 250 Rs. 250
TRAVELLERS CHEQUES
ISSUANCE(MINIMUM Rs. 100) 1% 1%
ENCASHMENT Rs. 100
ADDITIONAL FEATURES
doorstep banking
courier pick up and 1 per day free(Rs. 25 per
delivery(non cash) transaction)
cash delivery(1000-100000) 1 per day free (Rs. 50 per
transaction)
demand draft delivery Rs. 50 per transaction
81
AnnexureIII
82
Features Bajaj Allianz (Ulip) ICICI
Policy Name Capital Unit Gain Life time Plus
Age
Minimum age at entry MUTUAL0FUNDS
Yrs (Risk commences
AND OTHER at age
INVESTMENT 7) COMPARITIVE ANALYSIS AND INVESTMENT STRATEGIES
TOOLS 0
Maximum age at entry 60 Yrs 65
Risk covered for age
between 7-70 years 0-75
Premium Amount
(minimum)
Annual Rs.10000 20000
Half-Yearly Available
Quarterly Available
Monthly Rs.1000 (Rs.5000 for top up)
Single premium payment Available Available
Y times the annual prem. depending on
Maximum Assured Amount age Annual Premium* (Term/2)
Age Y (times)
0-30 100
31-35 85
36-40 70
41-45 50
46-55 30
56-60 20
0.5 times the Policy Term times
Minimum Assured Amount Annualised Premium. Annual Premium* (Term/2)
annual premium
Regular Premium allocation Allocation charge in % Allocation rate
<Rs. 35000 95% 73%
Rs.35000-Rs.99999 95% 73%
Rs. 100000-Rs.149999 95% 99%
95%
Rs.150000-Rs.2499999 (Uptil Rs.199999), 96% 99%
Rs.2500000-Rs.9999999 96%
Rs.10000000-Rs.4999999 97%
Rs.5000000&above 97%
Benefits offered
Death Benefit Sum Assured or Fund Value
Before Age of 7 yrs Fund value
Between age of 7 yrs & 60 Sum assured less partial withdrawls/ fund
yrs value on as on date of intimation
Sum assured less partial withdrawls/ fund
On & after 60 yrs value on as on date of intimation
Maturity Benefit Fund value Fund Value
Minimum partial withdrawl
amount Rs.5000 Rs.2,000
(at bid price)
Investment Options Liquid Fund- Risk profile –Low Flexi Growth II
Bond Fund- Risk profile- Moderate Maximiser II
Equity Growth Fund- Risk Profile- Very
High Flexi Balanced II
Equity Index Fund II- Risk profile- High Balancer II
Accelerator Mid-Cap Fund – Risk profile-
Very High Protector II
Preserver
Minimum Balance across all
funds Rs.10000 Rs.10000
Tax Benefits
Sec 80(c) Save upto Rs.33660 each Save upto Rs.33660 each
year as prem. Upto Rs.100000 year as prem. Upto Rs.100000
are allowed as a deduction are allowed as a deduction
Sec 10(10(d)) Benefits are tax free Benefits are tax free
Charges
Annual Mortality charges Depending on your age Depending sum Assured
charged every month
Annual Administration
charges Rs.600p.a. per policy Rs.60 per month
Annual Fund Management 2.75%p.a.of the NAV for Equity growth
charges fund & Accelerator MidCap Fund 1.5%p.a. Flexi Growth II 83
2.25%p.a.for Equity Index Fund II 1.5%p.a. Maximiser II
Cont: Cont:
1.75%p.a.for Liquid Fund Bond Fund 1.0%p.a. Flexi Balanced II
1.0%p.a. Balancer II
Conclusion
The investors while investing

Selecting a tool may seem like a daunting task, but knowing your objectives
and risk tolerance is half the battle. Thus the investors should study the
tools before investing in and should match the scheme with their
preferences.
Before acquiring shares in any fund, an investor must first identify his or her
goals and desires for the money being invested. Are long-term capital gains
desired, or a current income is preferred. Will the money be used to pay for
college expenses, or to supplement a retirement that
is decades away? Identifying a goal is important because it will enable the
investor dramatically whittle down the list so many tools available in the the
public domain.
In addition, investors must also consider the issue of risk tolerance. If the
investor is able to afford and mentally accept dramatic swings in portfolio
value then he should go for riskier investments. Or, if a more conservative
84
investment warranted from the scheme. Therefore Identifying objective

preferences and risk tolerance is as important as identifying a goal.
To finish, I would like to state that this project gave me a lot of assistance
to get a hold on the basic knowledge about the products like ULIP, saving
accounts and Mutual Funds in detailed manner and also all the mechanism,
maneuver related to it.
Age
• The segment (18-25) can be a potential customer segment for the
bank as most of the people are falling in the income group of less than
Rs.15000 per month.The company can target this segment by offering
its ULIP product both as an insurance and investment product, which
can provide high returns as the investments and provide the insurance
cover too, as a large segment doesn’t have an insurance cover. The
return in new Capital Unit Gain Plan is around 20% which is quite good
enough. Mutual Fund Schemes can also be offered to those
respondents in this age group who are risk takers as in mutual funds
small amounts can invested. The need is to make this segment aware
of the products like ULIP (which is promising return of 20-25% p.a.)
and tap as many customers as possible. Also Positioning of the Mutual
Funds should be such that attracts customers.
• In order to tap the 25-35 years segment ULIP can be promoted as an
investment option rather than an insurance product. Mutual funds
need to be promoted as only a small segment is investing in mutual
funds. Mutual funds and ULIP both can be the best investment option
for this segment.
• As the segment 35-45 years is an investing and risk taking segment,
Mutual funds promising higher returns can be promoted in this
segment. The product ULIP is also highly acceptable by this segment,
so both of these products can be promoted as a best investment
options promising high returns and low risks. People in this age group
85
can also invest in real estate as by this age people are in the position
to invest large lump sum money for this investment.
• In the segment of 46 & above age group people be targeting for the
Mutual funds as can be seen that very few people are investing M.Fs.
this is because this segment consists of risk averters as this segment
have invested in Fixed Deposits and government securities and
insurance than any other investment product as safety is the most
important factor which is being considered while investing by this
segment. But these people are neutral for these investments. These
thus these products can be promoted as safe investments and better
than F.D’s only then this segment can be tapped.
Income
• The income bracket less than Rs.15000 per month are basically safe
investors and have not and do not prefer investing in mutual funds
and ULIP. Thus positioning of these products should be such that
people are attracted towards this scheme. Emphasis on marketing
of the products should be given.
• Respondents under income bracket Rs.15000-Rs.30000 have
mainly invested in insurance. But when survey was done and their
preferences were asked these respondents strongly preferred
investing in these strategies.
• Income Bracket of Rs.30000-Rs.50000 is the strong contenders for
investing their money and these people have invested in real
estate, insurance and fixed deposits. Moreover there is mixed
preferences for their investments thus proper segmentation of the
sample should be done accordingly marketing strategies should be
adopted.
• Though there is a small percentage of respondents in income
bracket above Rs.50000 who least prefer investing in mutual fund.
But this is the segment which can be well targeted and their
portfolio should be such that gives them more returns. The case of
ULIP is different as people strongly prefer investing in this
86
investment strategy. Thus emphasis for selling ULIP in this income

bracket.
Occupation
The survey conducted has resulted in the observation that the
business class should be targeted for ULIP and Mutual funds as they
strongly prefer investing in these two products. These products should
be positioned as safe investment and then been sold it to service class
and retirees as these investors are the safe investor.
87
THANK YOU
88

Standard Charteres Report Final-2003 FRMT

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MUTUAL FUNDS AND OTHER INVESTMENT TOOLS COMPARITIVE ANALYSIS AND INVESTMENT STRATEGIES

3. Objective, Limitation. Reference……………………………………………….6

4. Satndard Chartered Bank…………………………………………………………..7

The Objective of the Report is to map the information required to assess

2. Study various aspects to analyze the Performance of the Products.

3. To study various provisos -

I.e. - Individual Risk Tolerance, Investing capacity, Relation

1. Secondary Data-Useful Financial insights are not easily available.

STANDARD CHARTERED BANK

Leading the way in Asia, Africa and the Middle East

In its unique position as an international bank with strong franchise,

With 150 years of emerging market experience, our in-depth understanding

Understanding that each customer's needs are unique, Standard Chartered

• Structured yield enhancement products to match risk appetites and

International Network, Local Presence

Innovative Client Solutions

One-Stop Range of Products and Services

Standard Chartered Bank in India

Standard Chartered Bank is the largest international banking Group in India

The key businesses of Standard Chartered Bank in India include consumer

Some other product innovations of Standard Chartered Bank in India include

MORE THAN BANKING:

both aimed at the elimination avoidable blindness. Furthermore, in support

1. PERSONAL BANKING: To cater the diverse financial needs, Standard

2. SME BANKING: SME Banking provides integrated financial solutions

3. COMMERCIAL BANKING: Standard Chartered has maintained a long

In the project, I studied the products offered by the Standard Chartered

An investment can be described as perfect if it satisfies all the needs of all

The Investment Needs of an Investor

• Security of original capital: The chance of losing some capital has

• Wealth accumulation: This is largely a factor of investment

• Comfort factor: This refers to the peace of mind associated with an

• Tax efficiency: Legitimate reduction in the amount of tax payable is

• Income: This refers to money distributed at intervals by an

• Simplicity: Investment instruments are complex, but investors need

• Communication: This refers to informing and educating investors

It is also pertinent to differentiate between needs and wants. Wants can be

• Security of original capital is more important when performance falls.

• Performance is more important when investments are performing

Perfect investment would have been achieved if all the above-mentioned

Investment Planning involves identifying your financial goals throughout

Success as an investor depends upon ability to choose the right investment

Investment Planning also helps in striking a balance between risk and

Choosing the Right Investment Options

The choice of the best investment options will depend on personal

Liquidity – Accessiblty of money

Safety - The risk involved

Return – The expectation from the investments

The Investment Process

1. The investment process outlines the steps in creating a portfolio, and

3. The investment process emphasizes the different components that are

FIVE STEP INVESTMENT PLAN

Investing is a science, not an art,. We suggest a five-stage investment plan

 Need Analysis and Profiling

Then an optimum portfolio is designed for the investor. The basket of

Finally a continuous watch on the portfolio is extremely important.

Investment Strategies in India

Conventionally, Indian investors were investing in the following avenues:

Government Bonds – The Central and State Governments raise money

Money-back insurance - Insurance in India is mostly sold and bought as

Endowment Insurance – These policies are term policies. Investors have

Mutual Funds - There is a collection of investors in Mutual funds that have