A Summer Internship Project Report on GOLD LOAN-AN OVERVIEW Submitted in partial fulfillment of the requirements for the degree

of Post Graduate Diploma in Management (Marketing) By SAHIL THAKUR (Roll No.43) Under the guidance of Mr. Abhinand Mishra A Study Conducted for India info line ltd.

at Indira School of Business Studies, Tathawade, Pune 41103 (2012-14)

ACKNOWLEDGEMENT
I would like to thank Mr. abhinand mishra, without whom an internship with, India info line ltd would not have been possible. I am grateful to her for having taken time off his busy schedule and spoken to the concerned person to get me this internship. I express my gratitude to the India info line ltd. for having given me an opportunity to work with them and make the best out of my internship. I thank my trainers, Mrs. varsha for having trained me and constantly guided and supported me throughout the training period. My heartfelt gratitude also goes out to the staff and employees at IIFL for having co-operated with me and guided me throughout the one and a half months of my internship period. I thank my institute, for having given me this opportunity to put to practice, the theoretical knowledge that I imparted from the program. I thank the internship co-coordinators, for having guided and supported me through the course of the internship. I take this opportunity to thank my parents and friends who have been with me and offered emotional strength and moral support.

FORMAT OF CERTIFICATE FROM THE COLLEGE (College LetterHead)

This is to certify that Mr./Ms. ------------------------- is a bonafide student of this Institute and has successfully completed his/her project entitled _____________ at ___(Company Name) ________ for partial fulfillment of course Post Graduate Diploma in Management (Marketing) from Indira School of Business Studies.

Dr. Renu Bhargava Director, ISBS

Prof. ___________ Internal Guide

FORMAT OF COMPLETION CERTIFICATE FROM THE COMPANY (Companys Letterhead)

This is to certify that Mr./Ms. _______________________ student of Post Graduate Diploma in Management from Indira School of Business Studies has satisfactorily completed his/her project work entitled _________________ in ___________Department of ________(name of organization)_____ from _____to_______.

Authorized Signature & Seal

EXECUTIVE SUMMARY
Gold loan or loan against gold is the easiest and quickest way for servicing your financial needs. To avail a gold loan, all you need to do is pledge your gold ornaments with us and we would provide you with a loan amount as per the market value of your gold. Unlike other loans, gold loan does not require you to provide any income or salary proof. Moreover, it has comparatively lower interest rates; requires lesser documentation, and hence is processed in lesser time. We at IIFL provide maximum loan against your gold at lowest interest rates. We have a strong presence Pan-India and have serviced a large number of customers in a very short span. We offer different types of schemes as per your requirement and convenience. Following are the main features of our loans :Loan amount ranges from min Rs 5,000 to max Rs 10,00,000 Tenor for loans ranges from 3 months to 12 months Loan can be paid back on a monthly or quarterly basis Interest / Loan Amount due can be paid at any of our Gold Loan branches pan-India Minimal amount of paperwork and documentation is required Loan gets processed in as low as 5 minutes Variety of schemes are available to chose from Your Gold is insured and secured safely with us in fire and burglary proof vaults Gold has always been a valued commodity. Particularly in India, it is considered as auspicious, and used in the form of jewelry, coins and other assets. Due to their high value, people have been taking loans against gold ornaments for centuries. Till about a decade ago, most of such lending activities used to take place in the unorganized sector through pawnbrokers and money lenders. However, the scenario has changed with the

entry of organized players. According to our latest report, in the past few years, banks and non-banking finance companies (NBFCs) have made a significant presence in the gold loan market. It is anticipated that the organized gold loan market will grow at a compound annual rate of 25.5% during FY 2012 to FY 2015. The comprehensive research report, Gold Loan Market in India, finds that the organized gold loan market has grown tremendously over a period of time, thanks to the changing consumer perception about gold loan, and rising loan requirements. A new trend of gold financing for purchasing has also been observed in the industry. For providing our clients a deep insight into the Indian gold loan market, primary research was also conducted that studied the consumer behavior in the market. It was found that the consumer outlook is changing as people are increasingly taking gold loans to meet their various short-term needs. The region-wise analysis revealed that the organized gold loan market is mainly concentrated in the Southern India, while other regions are witnessing a comparatively low presence of organized players. It has been observed that the organized players are exploring the potential, and expanding their networks into North, East and West regions. The report analyzes the Indian gold loan industry, including its market size, penetration, type of institutions, and share of major players, and presents forecasts. It was also studied how the government regulations are impacting the industry. The comprehensive research work covers the competitive landscape, by including the profiles of major public and private banks and specialized NBFCs (Manappuram & Muthoot Finance) operating in the market.

Table of Contents

S N 1 2 3 4 5 6 7 8 9

Contents

Pg No

Introduction Industry / Company overview Review of Literature/ Theoretical Background

Objectives Research Methodology Data Analysis , Results and Interpretation Conclusions Limitations of the project Recommendations

INTRODUCTION
INDIA INFOLINE FINANCE LIMITED

The IIFL (India Infoline) group, comprising the holding company, India Infoline Ltd (NSE: INDIAINFO, BSE: 532636) and its subsidiaries, is one of Indias premier providers of financial services. IIFL offers advice and execution platform for the entire range of financial services covering products ranging from Equities and derivatives, Commodities, Wealth management, Asset management, Insurance, Fixed deposits, Loans, Investment Banking, Gold bonds and other small savings instruments. It has a presence in: Equities our core offering, gives us a leading market share in both retail and institutional segments. Over a million retail customers rely on our research, as do leading FIIs and MFs that invest billions. Private Wealth Management services cater to over 2500 families who have trusted us with close to Rs 25,000 crores ($ 5bn) of assets for advice. Investment Banking services are for corporates looking to raise capital. Our forte is Equity Capital Markets, where we have executed several marquee transactions. Credit & Finance focuses on secured mortgages and consumer loans. Our high quality loan book of over Rs. 6,200 crores ($ 1.2bn) is backed by strong capital adequacy of approximately 20%.

IIFL Mutual Fund made an impressive beginning in FY12, with lowest charge Nifty ETF. Other products include Fixed Maturity Plans. Life Insurance, Pension and other Financial Products, on open architecture complete our product suite to help customers build a balanced portfolio. IIFL has received membership of the Colombo Stock Exchange becoming the first foreign broker to enter Sri Lanka. IIFL owns and manages the website, www.indiainfoline.com, which is one of Indias leading online destinations for personal finance, stock markets, economy and business. IIFL has been awarded the Best Broker, India by FinanceAsia and the Most improved brokerage, India in the AsiaMoney polls. India Infoline was also adjudged as Fastest Growing Equity Broking House - Large firms by Dun & Bradstreet. A forerunner in the field of equity research, IIFLs research is acknowledged by none other than Forbes as Best of the Web and a must read for investors in Asia. Our research is available not just over the Internet but also on international wire services like Bloomberg, Thomson First Call and Internet Securities besides others where it is amongst one of the most read Indian brokers. IIFL is a listed company with a consolidated group net worth of about Rs 1,800 crores. The income and net profit during FY2010-11 were Rs. 14.7 bn and Rs. 2.1 bn respectively. The Group has a consistent and uninterrupted track record of profits and dividends since its listing in 2005. The company is listed on both Exchanges and also trades in the derivatives segment. IIFLs Crisil and ICRA Rating for short term is top rated as CRISIL A1+ and ICRA (A1+) respectively. For long term, IIFL has been rated ICRA (AA-) by ICRA and CRISIL AA-/Stable by CRISIL indicating high degree of safety for timely servicing of financial obligations.

IIFL is near you physically: we are present in every nook and cranny of the country, with over 4,000 business locations across 900 cities in India. You can reach us in a variety of ways, online, over the phone and through our branches. All our offices are connected with the corporate office in Mumbai with cutting edge networking technology. The group caters to a customer base of about a million customers. Our physical presence in key global markets includes subsidiaries in Colombo, Dubai, New York, Mauritius, London, Singapore and Hong Kong.

COMPANY PROFILE
About the Company
India Infoline Finance Limited is a subsidiary of India Infoline Limited (IIFL). The Company was originally incorporated on July 7, 2004 as a private limited company under the provisions of the Companies Act, 1956 as India Infoline Investment Services Private Limited. The Company was converted to a public limited company with effect from July 10, 2007.

The Company has obtained a certificate of registration dated May 12, 2005 bearing registration no.- 147365 issued by the RBI to carry on the activities of a NBFC under section 45 IA of the RBI Act, 1934. The Company is engaged in the activity of mortgage financing, loan against securities, gold loans, margin funding and other consumer financing products. India Infoline Finance Ltd. is professionally managed and shares the professional values and ethos of its parent company, IIFL and has acquired and maintained a reputation for reliability, transparency of operations and absolute integrity. A steady growth rate validates the trust that industry has reposed in the Company. The IIFL (India Infoline) group, comprising the holding company, India Infoline Ltd and its subsidiaries, is one of Indias premier providers of financial services. IIFL has received membership of the Colombo Stock Exchange becoming the first foreign broker to enter Sri Lanka. IIFL owns and manages the website, www.indiainfoline.com, which is one of Indias leading online destinations for personal finance, stock markets, economy and business. IIFL has been awarded the Best Broker, India by FinanceAsia and the Most improved brokerage, India in the AsiaMoney polls. India Infoline was also adjudged as Fastest Growing Equity Broking House - Large firms by Dun & Bradstreet. A forerunner in the field of equity research, IIFLs research is acknowledged

IIFLs Crisil and ICRA Rating for short term is top rated as CRISIL A1+ and ICRA (A1+) respectively. For long term, IIFL has been rated ICRA(AA-) by ICRA and CRISIL AA-/Stable by CRISIL indicating high degree of safety for timely servicing of financial obligations.

IIFL is near you physically: it is present in every nook and cranny of the country, with over 3,000 business locations across 500 cities in India. The group caters to a customer base of about a million customers.

Its physical presence in key global markets includes subsidiaries in Colombo, Dubai, New York, Mauritius, London, Singapore and Hong Kong

PRODUCT AND SERVICES

Overview We are a one-stop financial services shop, most respected for quality of its advice, personalized service and cutting-edge technology. Equities IIFL is a member of BSE and NSE registered with NSDL and CDSL as a depository participant and provides broking services in the cash, derivatives and currency segments, online and offline. IIFL is a dominant player in the retail as well as institutional segments of the market. It recently became the first Indian broker to get a membership of the Colombo Stock Exchange and is also the first Indian broker to have received an in-principle approval for membership of the Singapore Stock Exchange. IIFLs Trader Terminal, its proprietary trading platform, is widely acknowledged as one of the best available for retail investors. Investors opt for IIFL given its unique combination of superior Service, cutting-edge proprietary Technology, Advice powered by world-acclaimed research and its unparalleled Reach owing to its over 2500 business locations across over 500 cities in India. IIFL received the BQ1 broker grading (highest grading) from CRISIL. The assigned grading reflects an effective external interface, robust systems framework and strong risk management. The grading also reflects IIFLs healthy regulatory compliance track record and adequate credit risk profile.

IIFLs analyst team won Zee Business Indias best market analysts awards 2009 for being the best in the Oil and Gas and Commodities sectors and a finalist in the Banking and IT sectors. IIFL has rapidly emerged as one of the premier institutional equities houses in India with a team of over 25 research analysts, a full-fledged sales and trading team coupled with an experienced investment banking team. The Institutional equities business conducted a very successful Enterprising India global investors conference in Mumbai in March 2010, which was attended by funds with aggregate AUM over US$5 trillion and CEOs and other executives representing corporates with a combined market capitalization of over US$500 billion. The Discover Sri Lanka global investors conference, held in Colombo in July 2010, was attended by more than 50 leading global and major local investors and 25 Sri Lankan corporates, along with senior Government officials.

Commodities IIFL offers commodities trading to its customers vide its membership of the MCX and the NCDEX. Our domain knowledge and data based on in depth research of complex paradigms of commodity kinetics, offers our customers a unique insight into behavioral patterns of these markets. Our customers are ideally positioned to make informed investment decisions with a high probability of success.

Credit and finance IIFL offers a wide array of secured loan products. Currently, secured loans (mortgage loans, margin funding, loans against shares) comprise 94% of the loan book. The Company has discontinued its unsecured products. It has robust credit processes and collections mechanism resulting in overall NPAs of less than 1%. The Company has deployed proprietary loanprocessing software to enable stringent credit checks while ensuring fast application processing. Recently the company has also launched Loans against Gold.

Insurance IIFL entered the insurance distribution business in 2000 as ICICI Prudential Life Insurance Co. Ltds corporate agent. Later, it became an Insurance broker in October 2008 in line with its strategy to have an open architecture model. The Company now distributes products of major insurance companies through its subsidiary India Infoline Insurance Brokers Ltd. Customers can choose from a wide bouquet of products from several insurance companies including Max New York Life Insurance, MetLife, Reliance Life Insurance, Bajaj Allianz Life, Birla Sunlife, Life Insurance Corporation, Kotak Life Insurance and others. Wealth Management Service IIFL offers private wealth advisory services to high-net-worth individuals (HNI) and corporate clients under the IIFL Private Wealth brand. IIFL Private Wealth is managed by a qualified team of MBAs from IIMs and premier institutes with relevant industry experience. The team advises clients across asset classes like sovereign and quasi-sovereign debt, corporate and collateralised debt, direct equity, ETFs and mutual funds, third party PMS, derivative strategies, real estate and private equity. It has developed innovative products structured on the fixed income side. It also has tied up with Interactive Brokers LLC to strengthen its execution platform and provide investors with a global investment platform.

Investment Banking IIFLs investment banking division was launched in 2006. The business leverages upon its strength of research and placement capabilities of the institutional and retail sales teams. Our experienced investment banking team possesses the skill-set to manage all kinds of investment banking transactions. Our close interaction with investors as well as corporates helps us understand and offer tailor-made solutions to fulfill requirements. The Company possesses strong placement capabilities across institutional, HNI and retail investors. This makes it possible for the team to place large issues with marquee investors.

HISTORY AND MILESTONES

2011- Launched IIFL Mutual Fund 2010 - Received in-principle approval for membership of the Singapore Stock Exchange Received membership of the Colombo Stock Exchange 2009 - Acquired registration for Housing Finance SEBI in-principle approval for Mutual Fund Obtained Venture Capital license 2008 - Launched IIFL Wealth Transitioned to insurance broking model 2007 - Commenced institutional equities business under IIFL Formed Singapore subsidiary, IIFL (Asia) Pte Ltd 2006 Acquired membership of GDCX Commenced the lending business 2005 - Maiden IPO and listed on NSE, BSE 2004 - Acquired commodities broking license Launched Portfolio Management Service 2003 - Launched proprietary trading platform Trader Terminal for retail customers

2000 - Launched online trading through www.5paisa.com Started distribution of life insurance and mutual fund 1999 - Launched www.indiainfoline.com 1997 - Launched research products of leading Indian companies, key sectors and the economy Client included leading FIIs, banks and companies. 1995 Commenced operations as an equity research firm.

REVIEW LITERATURE
Background: Gold and the Indian Society
As previously noted gold has traditionally been among the most liquid assets and is an accepted universal currency. It has traditionally been consumed by individuals in the form of jewelry, especially in India where it is considered auspicious. Gold is presumed to be a safe haven in times of economic uncertainty, a fact exemplified by a 30% increase in the value of gold over the past year. India is one of the largest markets for gold, accounting for approximately 10% of the total world gold stock as of 2010. Rural India accounts for 65% of this gold stock. Though gold prices have increased at more than 19% CAGR from 2002 to 2010, gold stock in India has grown at 22% CAGR during the same period to 18,000 tons (Rs. 32,000 billion). The demand for gold has followed a regional trend with southern India accounting for 40% of annual demand, followed by the west (25%), north (20-25%) and east (10-15%).

Indian households typically have an emotional attachment and sense of personal belonging to the gold they own, which is usually in the form of jewelry, coins or bars. Thus, gold owned by Indian families is rarely liquidated unless in extreme financial need consequently, monetary value of a gold investment is rarely realized. But, pledging gold ornaments and other gold assets to local pawnbrokers and money lenders to avail loans has been prevalent in the Indian society for many decades, particularly in rural areas. However, over the past decade, the organized sector banks and NBFCs have taken the lead. The urban populace is also beginning to realize the potential value that can be realized through gold loans, which has led to rapid growth of the gold loan market in India.

Value of gold stock

35000 30000 25000 20000 15000 10000 5000 0 FY02 FY07 FY09 FY10 Column1

ORGANISED GOLD LOAN MARKET SIZE

400 350 300 250 200 150 100 50 0 FY02 FY07 FY09 FY11 Series 1

OBJECTIVES OF THE STUDY

RESEARCH METHODOLOGY

DATA ANALYSIS/ INTERPRETATION

CONCLUSION
For borrowers, gold loans have emerged as one of the best means of raising quick, short-term capital. For lenders, gold loans are more advantageous compared with home and car loans because of the shorter tenures, lower processing time and cost, and greater returns due to higher interest rates. These factors, along with appreciation in value of gold, have led to an explosion in the gold loan market. With everyone wanting a piece of this action, the organized sector is challenging the large unorganized gold loan market dominated by pawnbrokers and moneylenders, with NBFCs leading the pack due to simpler approval and disbursal processes, flexible products and better accessibility. An examination of these trends makes clear that banks/NBFCs that arent yet into the gold loan market might find it attractive. This is due to the following factors: Better ROI due to lower cost, higher interest rates and strong collateral. Ability to compensate for lower off-take of car/ home loans. Scope for cross-sell opportunities in future including other gold-based products. Opportunity to capture the growing under-served and underpenetrated market. With approximately 65% of the market in rural areas, firms need to develop strategies to target this segment effectively and provide better accessibility to borrowers. When expanding, firms need to ensure consonance of services and operations throughout the network. Firms need to manage risks related to possible sharp fall in gold prices and non-adherence of regulatory norms and also need to ensure that physical assets are properly valued, stored and documented. Firms need to invest in technology to better manage the increasing volumes and to reduce risks.

LIMITATIONS
Time was one of the constraints to study the market in depth. Also due to time limitation, all the products of IIFL and markets for these products could not be studied. The finding of survey were made on the basis of data provided by the people {working in different sector} which may not be exactly correct hence may perfect authenticity of the result. We have to collect the information according to the convenience of the people .Hence the data may not be accurate. But due to the appreciable support of the IIFL team and my project guide, I was able to get a brief idea of the entire company.

RECOMMENDATION
In order to protect margins, prefer fixed interest rates to floating rates. With cost of funds seeing a sharp rise, non-banking financial companies (NBFCs) should adopt different strategies to protect margins. They should prefer fixed interest rates over floating rates. NBFCs are also lowering dependence on banks and tapping cheaper sources of funds like debentures, commercial papers, mutual funds (MFs), other institutions and bonds. It should be done to mitigate the impact of fluctuating interest rates on margins. Only 25-30 percent of working capital needs should be met through funds at floating interest rates. NBFCs are seeking to lower their dependence on bank funding, which still constitutes roughly 75 per cent of their borrowings. However, on an incremental basis, nearly half of their funding requirements are met through non-banking sources like retail bonds, securitization and institutional investors like LIC and MFs. The most important aspect is the return of MFs as a source of funds. Bank funds are getting costlier, whereas money from other sources such as retail, MFs and FIIs is cheaper by 50-100 basis points. In some cases, banks are charging nearly 11 per cent, that too on a floating basis, which is at least 200 basis points higher than what retail lenders and MFs charge. With rising interest rates, NBFCs, particularly the ones with lower ratings, will find it hard to maintain margins. The average cost of funds has already reached around 10.5 per cent, compared to 8.5-9 per cent six months earlier. Post-crisis, a lot of them stayed away from MFs, but they are slowly staring to tap these sources again. NBFCs with good ratings, well-diversified asset-liability mix, high capital adequacy ratio and better parentage are likely to handle the situation well, as they are better placed to bargain and raise funds at cheaper rates.

BOBLOGRAPHY
Websites used: www.iifl.com www.rbi.org.in www.livemint.com Newspaper reports: Economic times Mint Research papers: Surveying the Indian Gold Loan Market-Cognizant 20-20 insight, Report of the Working Group to Study the Issues Related to Gold Imports and Gold Loans by NBFCsReserve Bank Of India.

QUESTIONNARE
(1) NAME:

(2) DATE OF BIRTH:

(3) MARITAL STATUS:

(4) OCCUPATION:

--------------------------------------------------

Date..Month Year.

(1) Single

(2) Married

( 1) Student

(2) Business

(3 ) Employee

(4) other

If other ..

(5) CONTACT NO.

(6) EMAIL ID: .....

(7) NO OF EARNING MEMBER:

More than 4

(8) Your Income p.a.:

(1) 10000 to 15000 p.m. p.m.

(2) 16000 to 20000

(3) 21000 to 25000 p.m. than 25000

(4) more

(9) Family Income :

SR.NO NAME RELATION AGE DREAMS/ ASPIRATION

Q.1 How many times in a year you have emergency requirement of money?

Q.2 How do you manage when you require money?

Q.3 Are you aware about the concept of Gold Loan?

1.YES

2. NO

(Gold loan is fastest & safest mode of getting money with minimal interest rate with much flexibility)

Q.4 Have you ever used Gold Loan Services?

1.YES

2. NO

If Yes which Company ______________ Amount of Loan ____________________

Q.5 What according to you is the safest instrument of Investment & Saving?

1. Banks Saving A/C

2. Insurance

3.Real Estate

4. Stocks & Shares

5.Fixed Deposit

6. Post Office

7.Others_______________________

Q.6 Where do you save and invest your money?

DO YOU INVEST IN HOW DO YOU

INVEST?

APPROX AMT INVESTED

p.a

YES OR NO REGULAR OR

RANDOM

SHARE MARKET

INSURANCE

MUTUAL

FUNDS(SIP)

POST OFFICE

FIXED DEPOSITS

Q.7 What is your approximately Monthly Household Expenses?

1. less than 10,000

2. up to 15,000

3. up to 20,000

4. up to 25,000

5. above 30,000

Q.8 DO you have your owned house or rented?

1. Owned

2. Rented

If

RENTED

When do you plan to buy new house? Amount reqd to buy house(budget)

Q.9 Have you taken any Housing Loan?

1.Yes

2. No

(If yes what interest rate _______%)

Q.10 Have you made any provision for your Retirement?

1.Yes

2. No

Q.11 What kind of document required for obtaining gold loan:

1.Photo ID proof 2.Address Proof

3.Pan Card ID

4.Voter

5.Ration Card Statement

6.Bank

Q.12 Whether any agreement/contract is signed with the clients for the services.

1. yes

2. no

Q.13 Whether the interest is charged is discolsed to customer in advance:

1. yes

2. no

Q.14 Number of compliants raised by customer:[please specify}

1. yes

2. no

Q.15 Organisational details:

1. Name of organisation

2 .Name of contact person..

3.Design and contact details