DEEPAK

Summer Internship Project Report
On
Analysis of Investment Activities

Undertaken at
Standard Chartered Bank
Submitted in partial fulfillment of the requirement for the award of
PGDBM
Submitted By: Under the supervision of:

Deepak Asnora Neetesh Deepankar
Roll No-SBAJU08009 Area Sales Manager
NIIM - School of Business Administration

B-II/61, Sher Shah Suri Marg, MCIE, Mathura Road, Badarpur, New Delhi
DECLARATION
I, Deepak Asnora, a bonafide student of PGDBM at the NIIM – School of Business

Administration, New Delhi, hereby declare that I have undergone the Summer Internship
on Analysis of Investment Activities in Standard Chartered Bank under the supervision
of Mr.Nitish Dipankar and from 21st of april to 28th of may.
I also declare that the present project report is based on the above summer internship and
is my original work. The content of this project report has not been submitted to any
other university or institute either in part or in full for the award of any degree, diploma
or fellowship.
Further, I assign the right to the College, subject to the permission from the organization
concerned, use the information and contents of this project to develop cases, caselets,
case leads, and papers for publication and/or for use in teaching.
Place: New Delhi Deepak Asnora
Date: 29-05-09 Roll No.-SBAJU08009
Summer internship report/Deepak Asnora/SBAJU08009 2

ACKNOWLEDGEMENT
We wish to express our gratitude to Standard Chartered Bank’s management for giving
us an opportunity to be a part of their esteem organization and enhance our knowledge by
granting permission to do our summer training project under their guidance.
We are grateful to Mr. NITISH DIPANKAR (Team Leader), our guide, for his invaluable
guidance and cooperation during the course of the project. He provided us with his
assistance and support whenever needed that has been instrumental in completion of this
project. The learning during the project was immense & invaluable.
Deepak Asnora

Contents
1. Introduction…………………………………………………………………….5
2. Investments……………………………………………………………………..8
3. Investment Process………..……………………………………………… . . 13
4. Investment Strategies in India. ………………………………………………. 16
5. Portfolio Management………………………………………………………. 20
6. About Standard Chartered……..…………………………………………….. 23
7. Products Offered……..……………………………………………………….. 27
8. Savings Account……………..……………………………………………….. 29
9. Unit Linked Insurance Policy…..…………………………………………….. 33
10. Capital Unit Gain Policy…..………………………………………………..... 44
11. Comparison of ULIP……………………………………………………….… 45
12. Mutual Fund……………………………………………………………….… 50
13 ULIP Vs Mutual Fund…………………………………………………….…. 66
14. Survey………………………………………………………………………... 68
15. Questionnaire……………………………………………………………......... 70
16. Results .......................................................................................................…... 72
17. Conclusion..........................................................................................................81.

EXECUTIVE SUMMARY
The project basically includes the study of various financial products of the bank and
understanding the customer investing patterns. Initially it will focus on the development
of an investment strategy and then will proceed with the analysis and choice of
investment instruments available in the current market scenario.
The present report is an amalgamation of our thoughts and our efforts to study the
present banking and investment scenario of investor in the field of NSC, bank deposits,
shares, ulip and insurance policy.
Advanced statistical technology for measurement, analysis and tests have been used in
the preparation of the project.
Software used: Excel

INRODUCTION
The Indian Banking System: The Current State and Road Ahead
India’s banking sector is growing at a fast pace. India has become one of the most
preferred banking destinations in the world. The reasons are numerous: the economy is
growing at a rate of 8%, Bank credit is growing at 30% per annum and there is an ever-
expanding middle class of between 250 and 300 million people (larger than the
population of the US) in need of financial services. All this enables double-digit returns
on most asset classes which is not so in a majority of other countries. Foreign banks in
India achieving a return on assets (ROA) of 3%, their keen interest in expanding their
businesses is understandable. Indian markets provide growth opportunities, which are
unlikely to be matched by the mature banking markets around the world. Some of the
high growth potential areas to be looked at are: the market for consumer finance stands
at about 2%-3% of GDP, compared with 25% in some European markets, the real estate
market in India is growing at 30% annually and is projected to touch $ 50 billion by
2008, the retail credit is expected to cross Rs 5,70,000 crore by 2010 from the current
level of Rs 1,89,000 crore in 2004-05 and huge SME sector which contributes
significantly to India’s GDP.
In order to gain further access to the global trade, the government is expanding the Free
Trade Agreements (FTA’s) with many countries (like Singapore, Thailand, and other
ASEAN members). After the Comprehensive Economic Co-Operation Agreement
(CECA) with Singapore, the government is now planning a similar deal with the 25-
member European Union. The EU is also likely to ask India to liberalise its financial
sector on the lines of the India-Singapore CECA.

New Business Opportunities
With the interest income coming under pressure, banks are urgently looking for
expanding fee-based income activities. Banks are increasingly getting attracted towards
activities such as marketing mutual funds and insurance policies, offering credit cards to
suit different categories of customers and services such as wealth management and equity
trading. These are indeed proving to be more profitable for banks than plain vanilla
lending and borrowing.
New Business Opportunities tapped by banks
Derivatives Trading
36.8%
Wealth Selling of Mutual

Management Funds 73.6%
21.05%
Forex Management
68.4%
Bancassurance
73.6%
Major foreign banks in India are:
• ABN-AMRO Bank
• Abu Dhabi Commercial Bank Ltd.
• American Express Bank Ltd
• BNP Paribas
• Citibank
• DBS Bank Ltd
• Deutsche Bank
• HSBC Ltd

• Standard Chartered Bank
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, 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.
• 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.
• 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.

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 .
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 - how accessible money is?

How easily an investment can be converted to cash, since part of invested money must be
available to cover financial emergencies.
Safety - what is 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.
Return - what can you expect to get back on your investment?

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.
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.
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.

Continuous Need Analysis
Monitoring and and
Portfolio Profiling
Management
FIVE STEP
INVESTMENT
Designing PLAN
an Internalizing
Optimum and Evaluating
Portfolio the Available
Avenues
Mapping and
Matching the
Profile

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.
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 haven 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 scrips 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.
1. Flipping
In the industry, flipping is a term used to describe the act of buying, fixing up,
and then reselling a piece of property. To flip a property in short term investment
usually requires a large investment of capital, whereas long term flipping relies on
less fixing up and more on the value of the area appreciating over time.

2.OffsettingCosts
Many costs associated with renting the property can be offset even while the
home is being renovated. After the renovation is complete but before it is sold,
you can rent the property out to new tenants. Of course, if you do that, you are
most likely a long term investor. You also have to weigh the hassles of finding
tenants, the damage tenants might cause to your property, up keeping the property
and performing repairs, etc.
3.SnappingUpForeclosedProperties
A great way to make a bigger profit on your real estate flip is to purchase only
properties that are foreclosing. A foreclosure happens when a property owner is
no longer able to make payments on a mortgage. These people have likely been
evicted from their home and, unable to rent the property, the owner is trying to
sell it to recover at least some of their costs. Foreclosed properties tend to be in
need of heavy repairs.
4.InvestmentFromAfar
It is also possible to invest in real estate without buying any particular property.
Many banks allow people to purchase trusts, bonds, or stocks oriented towards
real estate specifically. You will be sure to want to talk to a broker before getting
into this kind of real estate investing.
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.

PORTFOLIO MANAGEMENT
Portfolio management is the professional management of various securities (shares,

bonds etc) assets (e.g. real estate), to meet specified investment goals for the benefit of
the investors. Investors may be institutions (insurance companies, pension funds,
corporations etc.) or private investors (both directly via investment contracts and more
commonly via collective investment schemes e.g. mutual funds) .
The term asset management is often used to refer to the portfolio management of
collective investments, whilst the more generic fund management may refer to all forms
of institutional investment as well as investment management for private investors.
Investment managers who specialize in advisory or discretionary management on behalf
of (normally wealthy) private investors may often refer to their services as wealth
management or portfolio management often within the context of so-called "private
banking".
The provision of portfolio management services includes elements of financial analysis,

asset selection, stock selection, plan implementation and ongoing monitoring of
investments. Investment management is a large and important global industry in its own
right responsible for caretaking of trillions of dollars, euro, pounds and yen. Coming
under the remit of financial services many of the world's largest companies are at least in
part investment managers and employ millions of staff and create billions in revenue.
PORTFOLIO MANAGEMENT PROCESS
The process of managing an investment portfolio never stops. Once the funds are initially
invested according to the plan, the real work begins in monitoring and updating the status
of the portfolio and the investor’s needs.
The first step in the portfolio management process, is for the investor, either alone or
with the assistance of an investment advisor, to construct a policy statement. The
policy statement is a road map; in it, investors specify the types of risks they are willing
to take and their investment goals and constraints. All investment decisions are based on
the policy statement to ensure they are appropriate for the investor. Because investor
needs change over time, the policy statement must be periodically reviewed and updated.
The process of investing seeks to peer into the future and determine strategies that offer
the best possibility of meeting the policy statement guidelines.

In the second step of the portfolio management process, the manager should study
current financial and economic conditions and forecast future trends. The investor’s
needs, as reflected in the policy statement, and financial market expectations will jointly
determine investment strategy. Economies are dynamic; they are affected by numerous
industry struggles, politics, and changing demographics and social attitudes. Thus, the
portfolio will require constant monitoring and updating to reflect changes in financial
market expectations.
The third step of the portfolio management process is to construct the portfolio. With the
investor’s policy statement and financial market forecasts as input, the advisors
implement the investment strategy and determine how to allocate available funds across
different countries, asset classes, and securities. This involves constructing a portfolio
that will minimize the investor’s risks while meeting the needs specified in the policy
statement. Financial theory frequently assists portfolio construction.
The fourth step in the portfolio management process is the continual monitoring of the
Investor’s needs and capital market conditions and, when necessary, updating the policy
statement. Based upon all of this, the investment strategy is modified accordingly. A
component of the monitoring process is to evaluate a portfolio’s performance and
compare the relative results to the expectations and the requirements listed in the policy
statement.

Feedback loop Policy Statement
PORTFOLIO
MANAGEMENT
PROCESS
Examine current
and projected
Implement the plan
financial and
by constructing the
economic, political
portfolio
and social
conditions

Standard Chartered – leading the way in Asia, Africa and the Middle East
Background
Standard Chartered is one of the world's most international banks, employing more than
73,000 people, representing over 150 nationalities, worldwide. This diversity lies at the
heart of the Bank's values and supports the Bank's growth as the world increasingly
becomes one market.
Standard Chartered PLC is listed on both the London Stock Exchange and the Hong
Kong Stock Exchange and is consistently ranked in the top 25 among FTSE-100
companies by market capitalization.
Standard Chartered has a history of over 150 years in banking and operates in many of
the world's fastest-growing markets with an extensive global network of over 1,400
branches (including subsidiaries, associates and joint ventures) in over 50 countries in the
Asia Pacific Region, South Asia, the Middle East, Africa, the United Kingdom and the
Americas.
With strong organic growth supported by strategic alliances and acquisitions and driven
by its strengths in the balance and diversity of its business, products, geography and
people, Standard Chartered is well positioned in the emerging trade corridors of Asia,
Africa and the Middle East.
Standard Chartered derives over 90 per cent of profits from Asia, Africa and the Middle
East. Serving both Consumer and Wholesale Banking customers worldwide, the Bank
combines deep local knowledge with global capability to offer a wide range of innovative
products and services as well as award-winning solutions.

Trusted across its network for its standard of governance and corporate responsibility,
Standard Chartered takes a long term view of the consequences of its actions to ensure
that the Bank builds a sustainable business through social inclusion, environmental
protection and good governance.
Standard Chartered is also committed to all its stakeholders by living its values in its
approach towards managing its people, exceeding expectations of its customers, making
a difference in communities and working with regulators.
It serves both Consumer and Wholesale Banking customers. Consumer Banking provides
credit cards, personal loans, mortgages, deposit taking and wealth management services
to individuals and small to medium sized enterprises. Wholesale Banking provides
corporate and institutional clients with services in trade finance, cash management,
lending, securities services, foreign exchange, debt capital markets and corporate finance.
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
Photo card, the first Picture Card and was the first credit card issuer to be awarded the
ISO 9002 certification.

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 salaried 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 initiative 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, 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.
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
organizations 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 Centre’s to provide its customers with
effective solutions.

To fully 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 : Personal banking

2. Unit Linked Insurance Plan (ULIP): Personal banking
3. Mutual Funds: Commercial banking

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 in 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.
ELIGIBILITY (IN GENERAL)
• Indian Residents
• NRI’s
• Clubs, Associations, Trusts and Registered Societies
• HUF (Hindu Undivided Family)
• Foreign Nationals (QA-22)
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.

PARAMETERS
SuperValue Savings
SAVINGS ACCOUNT NAME aXcessPlus Savings Account Account
ACCOUNTS
CHARGES FOR OPENING THE
ACCOUNT NIL NIL
AVERAGE QUARTERLY
(DAILY)BALANCE REQD. Rs.25,000 Rs 50,000
Rs. 1250/qtr
Rs. 1500/qtr (Bal<Rs.7,500) (Rs.5000<=Bal<10k)
Rs.750/qtr(Rs.10000>Bal>Rs.500 Rs.1250/qtr(Rs.10000
PENALTY FOR UNSUFFICIENT AQB 0) >Bal>Rs.5000)
DORMANT A/C CHARGES Rs.1000 per yr. Rs.1000 per yr.
Rs.500 (within 6
ACCOUNT CLOSURE Rs.500 (within 6 months) 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 Free for 1st Yr
CERTIFICATE Free for 1st Yr yr,250/yr yr,250/yr
CARDS
DEBIT CARD ANNUAL FEE Rs.200 per year FREE
DEBIT CARD REPLACEMENT FEE Rs.200 Rs.200
ATM INTERCHANGE(NON Free for first 4 transactions per

PARTNER) month/ Rs.50 for beyond 4 trans.
SERVICES
NETBANKING FREE
INTERBRANCH/ INTERCITY
BANKING Rs.50
BILLPAY FREE
PHONE BANKING FREE

aXcessPlus Savings SuperValue Savings
PARAMETERS Account Account
STANDING INSTRUCTIONS
Rs.100(for setting) Rs.100(for setting)
SETTING UP Rs.25(on execution) Rs.25(on execution
DOOR STEP BANKING FREE
CASH PICK UP FREE
CASH DELIVERY/TRANSACTION FREE
CHEQUE BOOKS
CHEQUE BOOK CHARGES(AT PAR) FREE FREE
CHARGES FOR STOP PAYMENT OF
INSTRUMENT Rs.100 FREE
Rs.250 + other banks
CHEQUE RETURN CHARGES(Issued) charges Rs.250
CHEQUE RETURN Rs.100 + other banks
CHARGES(Deposited) charges FREE
MISCELLANEOUS
BALANCE CERTIFICATE(Upto 1
Yr)/more Than 1 Yr old FREE/Rs.250 FREE/Rs.250
BANKER'S REPORT Rs.50 FREE
SIGNATURE VERIFICATION Rs.25 FREE
INSURANCE PARTNER BAJAJ ALLIANZ BAJAJ ALLIANZ
Now let us have a look at the surveyed population to

know in which banks they have their bank accounts.

Various banks with which surveyed population has
accounts
13%
8% 38% icici
hdfc
sc
kotak
17%
abn
24%
ULIP (Unit Linked Insurance Plan)

INTRODUCTION:
A Unit Link Insurance Policy (ULIP) is one in which the customer is provided with a life
insurance cover and the premium paid is invested in either debt or equity products or a
combination of the two. In other words, it enables the buyer to secure some protection for
his family in the event of his untimely death and at the same time provides him an
opportunity to earn a return on his premium paid. In the event of the insured person's
untimely death, his nominees would normally receive an amount that is the higher of the
sum assured or the value of the units (investments). To put it simply, ULIP attempts to
fulfill investment needs of an investor with protection/insurance needs of an insurance
seeker. It saves the investor/insurance-seeker the hassles of managing and tracking a
portfolio or products.
A ULIP, as the name suggests, is a market-linked insurance plan. The main difference
between a ULIP and other insurance plans is the way in which the premium money is
invested. Premium from, say, an endowment plan, is invested primarily in risk-free
instruments like government securities (g secs) and AAA rated corporate paper, while
ULIP premiums can be invested in stock markets in addition to corporate bonds and g
secs.
ULIPs offer a variety of options to the individual depending on his risk profile. For
instance, an individual with an above-average risk appetite can choose a ULIP option that
invests upto 60% of premium in equities. Likewise, an individual with a lower risk
appetite can select a ULIP that invests upto 20% of premium in equities.
ULIP VS TRADITIONAL INSURANCE PLAN

It wasn't too long back, when the good old endowment plan was the preferred way to
insure oneself against an eventuality and to set aside some savings to meet one's financial
objectives. Then insurance was thrown open to the private sector. The result was the
launch of a wide variety of insurance plans, including the ULIPs.
Two factors were responsible for the advent of ULIPs on the domestic insurance horizon.
First was the arrival of private insurance companies on the domestic scene. ULIPs were
one of the most significant innovations introduced by private insurers. The other factor
that saw investors take to ULIPs was the decline of assured return endowment plans. Of
course, the regulator -- IRDA (Insurance and Regulatory Development Authority) was
instrumental in signaling the end of assured return plans.
Today, there is just one insurance plan from LIC (Life Insurance Corporation) -- Komal
Jeevan -- that assures return to the policyholder.
These were the two factors most instrumental in marking the arrival of ULIPs, but
another factor that has helped their cause is a booming stock market. While this now
appears as one of the primary reasons for their popularity, we believe ULIPs have some
fundamental positives like enhanced flexibility and merging of investment and insurance
in a single entity that have really endeared them to individuals.
SUM ASSURED

Perhaps the most fundamental difference between ULIPs and traditional endowment
plans is in the concept of premium and sum assured.
When you want to take a traditional endowment plan, the question your agent will ask
you are -- how much insurance cover do you need? Or in other words, what is the sum
assured you are looking for? The premium is calculated based on the number you give
your agent.
With a ULIP it works in reverse. When you opt for a ULIP, you will have to answer the
question -- how much premium can you pay?
Depending on the premium amount you state, you are offered a sum assured as a multiple
of the premium. For instance, if you are comfortable paying Rs 10,000 annual premium
on your ULIP, the insurance company will offer you a sum assured of say 5 to 20 times
the premium amount.
INVESTMENTS
Traditionally, endowment plans have invested in government securities, corporate bonds

and the money market. They have shirked from investing in the stock markets, although
there is a provision for the same.
However, for some time now, endowment plans have discarded their traditional outlook
on investing and allocate about 10%-15% of monies to stocks. This percentage varies
across life insurance companies.
ULIPs have no such constraints on their choice of investments. They invest across the
board in stocks, government securities, corporate bonds and money market instruments.
Of course, within a ULIP there are options wherein equity investments are capped.
EXPENSES

ULIPs are considered to be very expensive when compared to traditional endowment
plans. This notion is rooted more in perception than reality.
Sale of a traditional endowment plan fetches a commission of about 30% (of premium) in
the first year and 60% (of premium) over the first five years. Then there is ongoing
commission in the region of 5%.
Sale of a ULIP fetches a relatively lower commission ranging from as low as 5% to 30%
of premium (depending on the insurance company) in the first 1-3 years. After the initial
years, it stabilises at 1-3%. Unlike endowment plans, there are no IRDA regulations on
ULIP commissions.
Broadly speaking, ULIP expenses are classified into three major categories:
1)Mortalitycharges
Mortality expenses are charged by life insurance companies for providing a life cover to
the individual. The expenses vary with the age, sum assured and sum-at-risk for the
individual. There is a direct relation between the mortality expenses and the
abovementioned factors. In a ULIP, the sum-at-risk is an important reference point for
the insurance company. Put simply, the sum-at-risk is the difference between the sum
assured and the investment value the individual's corpus as on a specified date.
2) Sales and administration expenses

Insurance companies incur these expenses for operational purposes on a regular basis.
The expenses are recovered from the premiums that individuals pay towards their
insurance policies. Agent commissions, sales and marketing expenses and the overhead
costs incurred to run the insurance business on a day-to-day basis are examples of such
expenses.
3) Fund management charges (FMC)

These charges are levied by the insurance company to meet the expenses incurred on

managing the ULIP investments. A portion of ULIP premiums are invested in equities,
bonds, gsecs and money market instruments. Managing these investments incurs a fund
management charge, similar to what mutual funds incur on their investments. FMCs
differ across investment options like aggressive, balanced and debt ULIPs; usually a
higher equity option translates into higher FMC.
Apart from the three expense categories mentioned above, individuals may also have to
incur certain expenses, which are primarily 'optional' in nature- the expenses will be
incurred if certain choices that are made available to individuals are exercised.
a) Switching charges
Individuals are allowed to switch their ULIP options. For example, an individual can
switch his fund money from 100% equities to a balanced portfolio, which has say, 60%
equities and 40% debt. However, the company may charge him a fee for 'switching'.
While most life insurance companies allow a certain number of free switches annually, a
switch made over and above this number is charged.
b) Top-up charges
ULIPs allow individuals to invest a top-up amount. Top-up amount is paid in addition to
the premium amount for a particular year. Insurance companies deduct a certain
percentage from the top-up amount as charges. These charges are usually lower than the
regular charges that are deducted from the annual premium.
c) Cancellation charges
Life insurance companies levy cancellation charges if individuals decide to surrender
their policies (usually) before three years. These charges are levied as a percentage of the
fund value on a particular date.
ILLSTRATIONS:

ULIP expenses table
Tenure Yearly Expenses (%) Fund Effective
(Yrs) premium value rate of
(Rs) Initial Remaining Annual Annual fund (Rs) return
2 yrs tenure (pa) administration management (%)**
(pa) expenses* (Rs) charges (%)
10 358,417 6.48
15 703,694 7.53
20 25,000 27.00 3.00 180.00 1.00 1,232,827 7.98
25 2,042,497 8.22
30 3,281,631 8.36
pa: per annum
* Subject to inflation @ 5% pa.
** CAGR
Suppose an individual aged 30 years, wants to buy an 'aggressive' ULIP for a sum
assured of Rs 500,000 for a 30-Yr tenure. The premium he pays for the same is Rs
25,000. The expenses for the initial 2 years is assumed to be 27% while for the remaining
tenure, it is 3%. Fund management charges are assumed to be 1% p.a. of the corpus for
the entire tenure. We have also assumed that the individual stays aggressive throughout
the tenure and does not shift his money between the various fund options.
Assuming the investments appreciate at 10% compounded annualised growth rate

(CAGR). Thus fund value at the end of 10 years is Rs 358,417 and the effective CAGR
net of expenses is approximately 6.48%. However, it can be seen that as the years roll by,
the CAGR keeps going up with a corresponding increase in the fund value. For example,
the fund value at the end of the 20th year is Rs 1,232,827 while the CAGR has gone up to
approximately 7.98%. At the end of the 30th year, the CAGR has gone up to 8.36%.
The reason why the CAGR goes up over a period of time is because the ULIP expenses
even out over a period of time. The 'evening out' occurs because although the expenses
are high in the initial years, they fall thereafter. And as the years roll by, the expenses
tend to 'spread themselves' more evenly over the tenure of the ULIP. Another reason is
also because the expenses are levied on the annual premium amount, which stays the
same throughout the tenure. Therefore, the expenses do not have any impact on the
returns generated by the corpus.

Mortality expenses for ULIPs and traditional endowment plans remain the same as also
the administration charges.
One area where ULIPs prove to be more expensive than traditional endowment is in fund
management. Since ULIPs have an equity component that needs to be managed actively,
they incur fund management charges. These charges fluctuate in the 0.80%-1.50% (of
premium) range.
FLEXIBILITY
As we mentioned, one aspect that gives ULIPs an edge over traditional endowment is
flexibility. ULIPs offer a host of options to the individual based on his risk profile.
There are insurance companies that offer as many as five options within a ULIP with the
equity component varying from zero to a maximum of 100%. You can select an option
that best fits your objectives and risk-taking capacity.
Having selected an option, you still have the flexibility to switch to another option. Most
insurance companies allow a number of free 'switches' in a year.
Another innovative feature with ULIPs is the 'top-up' facility. A top-up is a one-time
additional investment in the ULIP over and above the annual premium. This feature
works well when you have a surplus that you are looking to invest in a market-linked
avenue, rather than stash away in a savings account or a fixed deposit.
ULIPs also have a facility that allows you to skip premiums after regular payment in the
initial years. For instance, if you have paid your premiums religiously over the first three
years, you can skip the fourth year's premium. The insurance company will make the
necessary adjustments from your investment surplus to ensure the policy does not lapse.

With traditional endowment, there are no investment options. You select the only option
you have and must remain with it till maturity. There is also no concept of a top-up
facility.
Your premium amount cannot be enhanced on a one-time basis and skipped premiums
will result in your policy lapsing.
TRANSPARENCY
ULIPs are also more transparent than traditional endowment plans. Since they are
market-linked, there is a price per unit. This is the net asset value (NAV) that is declared
on a daily basis. A simple calculation can tell you the value of your ULIP investments.
Over time you know exactly how your ULIP has performed.
ULIPs also disclose their portfolios regularly. This gives you an idea of how your money
is being managed. It also tells you whether or not your mutual fund and/or stock
investments coincide with your ULIP investments. If they are, then you have the
opportunity to do a rethink on your investment strategy across the board so as to ensure
you are well diversified across investment avenues at all times.
With traditional endowment, there is no concept of a NAV. However, insurers do send

you an annual statement of bonus declared during the year, which gives you an idea of
how your insurance plan is performing.
Traditional endowment also does not have the practice of disclosing portfolios. But given
that there are provisions that ensure a large chunk of the endowment portfolio is in high
quality (AAA/sovereign rating) debt paper, disclosure of portfolios is likely to evoke
little investor interest.

LIQUIDITY
Another flexibility that ULIPs offer the individual is liquidity. Since ULIP investments
are NAV-based it is possible to withdraw a portion of your investments before maturity.
Of course, there is an initial lock-in period (3 years) after which the withdrawal is
possible.
Traditional endowment has no provision for pre-mature withdrawal. You can surrender
your policy, but you won't get everything you have earned on your policy in terms of
premiums paid and bonuses earned. If you are clear that you will need money at regular
intervals then it is recommended that you opt for money-back endowment.
TAX BENEFITS
Taxation is one area where there is common ground between ULIPs and traditional
endowment. Premiums in ULIPs as well as traditional endowment plans are eligible for
tax benefits under Section 80C subject to a maximum limit of Rs 100,000. On the same
lines, monies received on maturity on ULIPs and traditional endowment are tax-free
under Section 10.

ULIP - KEY FEATURES (IN GENERAL):
1. Premiums paid can be single, regular or variable. The payment period too can
be regular or variable. The risk cover can be increased or decreased.
2. As in all insurance policies, the risk charge (mortality rate) varies with age.
3. The maturity benefit is not typically a fixed amount and the maturity period can
be advanced or extended
4. Investments can be made in gilt funds, balanced funds, money market funds,
growth funds or bonds.
5. The policyholder can switch between schemes, for instance, balanced to debt or
gilt to equity, etc.
6. The maturity benefit is the net asset value of the units.
7. The costs in ULIP are higher because there is a life insurance component in it
as well, in addition to the investment component.
8. Insurance companies have the discretion to decide on their investment

portfolios.
9. They are simple, clear, and easy to understand.
10. Being transparent the policyholder gets the entire episode on the performance
of his fund.
11. Lead to an efficient utilization of capital.
12. ULIP products are exempted from tax and they provide life insurance.
13. Provides capital appreciation.

14. Investor gets an option to choose among debt, balanced and equity funds.
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-BACKGROUND:
Bajaj Allianz Life Insurance Co Ltd is a joint venture between two leading
conglomerates- Allianz AG, one of the world's largest insurance companies, and Bajaj
Auto, one of the biggest two and three wheeler manufacturers in the world.
Allianz Group is one of the world's leading insurers and financial service providers.
Founded in 1890 in Berlin, Allianz is now present in over 70 countries with almost
174,000 employees. Allianz Group provides its more than 60 million customers
worldwide with a comprehensive range of services in the areas of Property and Casualty
Insurance, Life and Health Insurance, & Asset Management and Banking.
Bajaj Auto Ltd, the flagship company of the Rs80bn Bajaj Group is the largest
manufacturer of two-wheelers and three-wheelers in India and one of the largest in the
world. Bajaj Auto has a strong brand image & brand loyalty synonymous with quality &
customer focus in India
Allianz AG with over 110 years of experience in over 70 countries and Bajaj Auto,
trusted for over 55 years in the Indian market, together are committed to offer Insurance
solutions that provide all the security needed for a family.

CAPITAL UNIT GAIN – A UNIT LINKED PLAN:
Capital Unit Gain is a unit linked endowment regular premium plan with the benefit of
life protection offered by Bajaj Allianz. 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 Unit Gain 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 Unit Gain 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.
Key Features of the Capital Unit Gain Plan

• Option of choosing any sum assured between minimum and maximum limits to match
insurance needs.
• 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 charge .

• Flexibility to increase / decrease the regular premiums
COMPARISON OF BAJAJ ALLIANZ ULIP vis-à-vis OTHER POPULAR ULIPS
AVAILABLE IN INDIA
Features Bajaj Allianz ICICI ABN Amro
Policy Name Capital Unit Gain Life time Plus Life Bond
Age
0 Yrs (Risk commences at age
Minimum age at 7)
entry 0 1
Maximum age at
entry 60 Yrs 65 65
Risk covered for
age between 7-70 years 0-75 7-70 years
Premium Amount
(minimum)
Annual Rs.10000 20000 NA
Half-Yearly Available NA
Quarterly Available NA
Rs.1000 (Rs.5000 for top
Monthly up) NA
Single premium Available
payment option Available Available Min.25000
Maximum Y times the annual prem. Annual Premium* 1.25 times the
Assured Amount depending on age (Term/2) Single Premium
Age Y
0-30 100
31-35 85
36-40 70
41-45 50
46-55 30
56-60 20

Minimum Assured 0.5 times the Policy Term Annual Premium*
Amount times Annualised Premium. (Term/2) As above
annual premium
Regular Premium Allocation charge in % Allocation rate Allocation rate

allocation
<Rs. 35000
95% 73% 97%
Rs.35000-Rs.99999 95%
73% 99%
Rs. 100000-
Rs.149999 95%
99% 101%
Rs.150000-
Rs.2499999 95%(Uptil Rs.199999), 96% 99% 102%
Rs.2500000-
Rs.9999999 96% 103%
Rs.10000000-
Rs.4999999 97% 104%
Rs.5000000&above 97% 104.5%
Benefits offered
Sum assured or
fund value
Sum Assured or (which ever is
Death Benefit Fund Value higher)
Before Age of 7
yrs Fund value
Sum assured less partial
Between age of 7 withdrawls/ fund value on
yrs & 60 yrs as on date of intimation
Sum assured less partial
withdrawls/ fund value on
On & after 60 yrs as on date of intimation
Maturity Benefit Fund value Fund Value Fund value
Minimum partial
withdrawl amount Rs.5000 Rs.2,000 Rs.5000
(at bid price)
Investment Liquid Fund- Risk profile –

Options Low Flexi Growth II Protector
Bond Fund- Risk profile-
Moderate Maximiser II Growth
Equity Growth Fund- Risk
Profile- Very High Flexi Balanced II Balanced

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 Rs.10000
Tax Benefits
Save upto Save upto
Sec 80(c) Save upto Rs.33660 each Rs.33660 each Rs.33660 each
year as prem. Upto year as prem. Upto year as prem.
Rs.100000 Rs.100000 Upto Rs.100000
are allowed as a are allowed as a
are allowed as a deduction deduction deduction
Benefits are tax Benefits are tax
Sec 10(10(d)) Benefits are tax free free free
Charges
Annual Mortality Depending sum
charges Depending on your age Assured Sum at Risk
charged every month
Annual 15% of single

Administration premium for first
charges Rs.600p.a. per policy Rs.60 per month 5 years
&1% thereafter
Annual Fund 2.75%p.a.of the NAV for
Management Equity growth fund & 1.5%p.a. Flexi 1%p.a. Profit
charges Accelerator MidCap Fund Growth II Funds
2.25%p.a.for Equity Index 1.5%p.a.
Fund II Maximiser II 1%p.a. Protector
1.75%p.a.for Liquid Fund 1.0%p.a. Flexi 1.25%p.a.
Bond Fund Balanced II Balancer
1.0%p.a. Balancer 1.5%p.a. Growth
II .
0 .75%p.a.Protector
II
0.75%p.a.
Preserver
No. of free switches
annually 3 4 2

0.5% subject to
Charges for Rs.100 of switch max. of Rs.500
additional switches Rs.200/ 5% of switch amount per switch
amount (which ever is
lower)
Minimum Switch
amount Rs.5000 or Fund value 2000 Rs.10000
(lower)
Minimum Top-up
premium Rs.1000 NA Rs.6250
Depending upon
Top up allocation 100% NA the amount
Flexibiliy
To increase every 3rd year
premium every 3rd year upto not available upto
3
5 times of revised regular times.Quantum
prem. / of
half of the term times Increase would
revised regular premium be
25%of sum
(which ever is higher) assured/
Rs. 100000.
(lower)
to pay top up
premiums Level of top up prem. not applicable
Between 1.25 times to 5
times
To decrease Proportionate decrease of

premium sum assured Available Available
(reduced regular prem. Not
to be less than regular
prem.)
Any amount, but

available only on
Policy
anniversaries
available

20% of chosen
premium
100 % penalty on partial or 4% and 2% of

full withdrawal before value of
Cancellation or completion of firt three accumulation
surrender years units.
Of single
Charges premium

MUTUAL FUNDS
A mutual fund is a pool of money, collected from investors, and is invested according to
certain investment objectives. A mutual fund uses the money collected from the investors
to buy those assets which are specifically permitted by its stated investment objective.
The fund’s assets are owned by the investors in the same proportion as their contribution
bears to the total contributions of all investors put together.
HISTORY OF THE INDIAN MUTUAL FUND 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 GROWTH OF UNIT TRUST OF INDIAUnit 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. The 1993 SEBI (Mutual Fund) Regulations were
substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The
industry now functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets
of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under
management was way ahead of other mutual funds.
Fourth Phase – since February 2003
In 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.
The graph indicates the growth of assets over the years.

Major government institutions that manage Mutual Funds
• Unit Trust of India

• Insurance Companies: General Insurance Corporation of India (GIC), Life Insurance
Corporation of India (LIC).
• Banks: State Bank of India, Bank of India, Bank of Baroda, Canara Bank,
• Financial Institutions: IDBI, ICICI, IL&FS
The major Private Sector Mutual Funds.
Some of the prominent private sector Mutual Fund organizations are: ING Barings,
Alliance Capital Fund, Birla Mutual Fund, ING Barings, Kothari Pioneer, Morgan
Stanley, Templeton Mutual Fund, Sun F&C Mutual Fund, Zurich India Mutual Fund,
DSP Merrill Lynch, Prudential ICICI Mutual Fund, Jar dine Fleming, Reliance Mutual,
Tata Mutual Fund & Kodak Mahindra Mutual Fund
Professional Management
Mutual Funds employ the services of skilled professionals who have years of experience
to back them up. They use intensive research techniques to analyze each investment
option for the potential of returns along with their risk levels to come up with the figures
for performance that determine the suitability of any potential investment.
Potential of Returns
Returns in the mutual funds are generally better than any other option in any other
avenue over a reasonable period of time. People can pick their investment horizon and
stay put in the chosen fund for the duration. Equity funds can outperform most other
investments over long periods by placing long-term calls on fundamentally good stocks.
The debt funds too will outperform other options such as banks. Though they are affected
by the interest rate risk in general, the returns generated are more as they pick securities
with different duration that have different yields and so are able to increase the overall
returns from the portfolio.

Liquidity
Fixed deposits with companies or in banks are usually not withdrawn premature because
there is a penal clause attached to it. The investors can withdraw or redeem money at the
Net Asset Value related prices in the open-end schemes. In closed-end schemes, the units
can be transacted at the prevailing market price on a stock exchange. Mutual funds also
provide the facility of direct repurchase at NAV related prices. The market prices of these
schemes are dependent on the NAVs of funds and may trade at more than NAV (known
as Premium) or less than NAV (known as Discount) depending on the expected future
trend of NAV, which in turn is linked to general market conditions. Bullish market may
result in schemes trading at Premium while in bearish markets the funds usually trade at
Discount. This means that the money can be withdrawn anytime, without much reduction
in yield. Some mutual funds however, charge exit loads for withdrawal within a specified
period.
Value Advantage
Effective Regulation
Unlike the company fixed deposits, where there is little control with the investment being
considered as unsecured debt from the legal point of view, the Mutual Fund industry is
very well regulated. All investments have to be accounted for, decisions judiciously
taken. SEBI acts as a true watchdog in this case and can impose penalties on the AMCs at
fault. The regulations, designed to protect the investors’ interests are also implemented
effectively.
Transparency
Being under a regulatory framework, mutual funds have to disclose their holdings,
investment pattern and all the information that can be considered as material, before all
investors. This means that the investment strategy, outlooks of the market and scheme

related details are disclosed with reasonable frequency to ensure that transparency exists
in the system. This is unlike any other investment option in India where the investor
knows nothing as nothing is disclosed.
Flexible and Affordable
Mutual Funds offer a relatively less expensive way to invest when compared to other
avenues such as capital market operations. The fee in terms of brokerages, custodial fees
and other management fees are substantially lower than other options and are directly
linked to the performance of the scheme. Investment in mutual funds also offers a lot of
flexibility with features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans enabling systematic investment or withdrawal of funds.
Even the investors, who could otherwise not enter stock markets with low investible
funds, can benefit from a portfolio comprising of high-priced stocks because they are
purchased from pooled funds.
CHARGES-
The Asset Management Companies (AMCs) managing the Mutual Funds levy a load as a
percentage of NAV at the time of entry into the Schemes or at the time of exiting from
the Schemes.
Entry Load - It is the load charged by the fund when an investor invests into the fund.
It increases the price of the units to more than the NAV and is expressed as a percentage
of NAV.
Exit Load - It is the load charged by the fund when an investor redeems the units from
the fund. It reduces the price of the units to less than the NAV and is expressed as a
percentage of NAV.
Cost of Churning/Turnover cost - It refers to the costs associated with the

churning (or changes made to the holdings) of the portfolio. Portfolio changes have
associated costs of brokerage, custody fees, transaction fees and registration fees, which
lower the returns. The quantum depends on the management style of the fund manager.
Expense Ratio - The Expenses of a mutual fund include management fees and all the
fees associated with the fund's daily operations. Expense Ratio refers to the annual
percentage of fund's assets that is paid out in expenses.

Tax –
Capital Gains Tax- The profit realizations on sale of securities and certain other
capital assets (including units of mutual funds) are called capital gains. The gains can be
classified into long-term or short-term depending on the period of holding of the asset
and are charged to tax at different rates. Gains on mutual fund units held for a period of
12 months or more are long-term gains. These gains are taxable.
Dividend Distribution Tax – The Mutual Fund schemes distributing dividends on their
units to the investors attract a distribution tax as per tax laws.
Securities Transaction Tax – AMCs managing the portfolio have to pay STT on
transaction (buying/selling) of different securities in the stock market. Presently the tax
rate is 0.025%.
Factors to check before investing
• Suitability for investor: The investor needs to make sure that the fund fits his
investment objectives and criteria -- in terms of risk, total returns, tax objectives,
frequency of dividend payouts, etc.
• Fund Managers track record: The Fund/Fund Manager should have a proven
track record regarding efficient fund management. Further, one should not concentrate on
only one-year returns , it should be over longer periods, in up markets and down.
• Portfolio quality: The fund should generally have investments in high quality
shares and securities that are reasonably liquid. You have to be careful about speculative
grade paper that is very risky and can backfire anytime. Also you should know that a
good portfolio is one which is reasonably diversified.
• Number of retail investors and size of corpus: It is always easier to deploy

and manage a small fund, but on the other hand even if a few investors exit, a small fund
could find itself in trouble ,whereas large funds can seize opportunities that smaller funds
may not be able to capitalize on.
• Weighted average maturity (in case of debt funds): If interest rates move
down, a portfolio that is weighted towards securities of longer maturities proves
advantageous. However, if interest rates rise, such a portfolio loses out.

Pointers to Mutual Fund Performance
Mutual Fund industry today, with about 34 players and more than five hundred schemes,
is one of the most preferred investment avenues in India. However, with a plethora of
schemes to choose from, the retail investor faces problems in selecting funds. Factors
such as investment strategy and management style are qualitative, but the funds record is
an important indicator too. Though past performance alone can not be indicative of future
performance, it is the only quantitative way to judge how good a fund is at present.
Therefore, there is a need to correctly assess the past performance of different mutual
funds. Quite simply then a fund generating more returns than the other is considered
better than the other. But this is just half the story.
Return alone should not be considered as the basis of measurement of the performance of
a mutual fund scheme, it should also include the risk taken by the fund manager because
different funds will have different levels of risk attached to them.
Risk associated with a fund can be defined as fluctuations in the returns generated by it.
The higher the fluctuations in the returns of a fund during a given period, higher will be
the risk associated with it. These fluctuations in the returns generated by a fund are
resultant of two guiding forces. First, general market fluctuations affecting all the
securities present in the market are called market risk or systematic risk and second,
fluctuations due to specific securities present in the portfolio of the fund, called
unsystematic risk. The Total Risk of a given fund is sum of these two and is measured in
terms of standard deviation of returns of the fund.
Systematic risk is measured in terms of Beta, which represents fluctuations in the NAV
of the fund vis-à-vis market. The more responsive the NAV of a mutual fund is to the
changes in the market; higher will be its beta. Beta is calculated by relating the returns on
a mutual fund with the returns in the market. While unsystematic risk can be diversified
through investments in a number of instruments, systematic risk cannot. By using the risk
return relationship, we try to assess the competitive strength of the mutual funds vis-à-vis
one another in a better way. It should be appreciated that there is a level of risk that a
fund has taken to generate this return. So what is really relevant is not just performance
or returns. What matters therefore are Risk Adjusted Returns (RAR).
The only caveat whilst using any risk-adjusted performance is the fact that their
clairvoyance is decided by the past. Each of these measures uses past performance data
and to that extent are not accurate indicators of the future.

Different Statistical Parameters
1. Standard Deviation
The most basic of all measures- Standard Deviation allows evaluating the volatility of the
fund. Alternatively, it allows measuring the consistency of the returns.
Volatility is often a direct indicator of the risks taken by the fund. The standard deviation
of a fund measures this risk by measuring the degree to which the fund fluctuates in
relation to its mean return, the average return of a fund over a period of time.
A security that is volatile is also considered higher risk because its performance may
change quickly in either direction at any moment.
A fund that has a consistent four-year return of 3%, for example, would have a mean, or
average, of 3%. The standard deviation for this fund would then be zero because the
fund's return in any given year does not differ from its four-year mean of 3%. On the
other hand, a fund that in each of the last four years returned -5%, 17%, 2% and 30% will
have a mean return of 11%. The fund will also exhibit a high standard deviation because
each year the return of the fund differs from the mean return. This fund is therefore more
risky because it fluctuates widely between negative and positive returns within a short
period.
2. Beta (ß)
Beta is a fairly commonly used measure of risk. It basically indicates the level of
volatility associated with the fund as compared to the benchmark.
So quite naturally the success of Beta is heavily dependent on the correlation between a
fund and its benchmark. Thus if the fund's portfolio doesn't have a relevant benchmark
index then a beta would be grossly inadequate.
A beta that is greater than one (ß >1) means that the fund is more volatile than the
benchmark, while a beta of less than one (ß <1) means that the fund is less volatile than
the index. A fund with a beta very close to 1 (ß ~1) means the fund's performance closely
matches the index or benchmark.
If, for example, a fund has a beta of 1.03 in relation to the BSE Sensex, the fund has been
moving 3% more than the index. Therefore, if the BSE Sensex increased 10%, the fund
would be expected to increase 10.30%.
Investors expecting the market to be bullish may choose funds exhibiting high betas,
which increase investors' chances of beating the market. If an investor expects the market

to be bearish in the near future, the funds that have betas less than 1 are a good choice
because they would be expected to decline less in value than the index.
3. R-Square
The success of Beta is dependent on the correlation of a fund to its benchmark or its
index. Thus whilst considering the beta of any security, investors should also consider
another statistic- R squared that measures the Correlation.
The R-squared of a fund advises investors if the beta of a mutual fund is measured
against an appropriate benchmark. Measuring the correlation of a fund's movements to
that of an index, R-squared describes the level of association between the fund's volatility
and market risk, or more specifically, the degree to which a fund's volatility is a result of
the day-to-day fluctuations experienced by the overall market.
R-squared values range between 0 and 1, where 0 represents no correlation and 1

represents full correlation. If a fund's beta has an R-squared value that is close to 1, the
beta of the fund should be trusted. On the other hand, an R-squared value that is less than
0.5 indicates that the beta is not particularly useful because the fund is being compared
against an inappropriate benchmark.
4. Alpha
Alpha = (Fund return-Risk free return) - Funds beta *(Benchmark return- risk free return)
Alpha is the difference between the returns one would expect from a fund, given its beta,
and the return it actually produces. An alpha of -1.0 means the fund produced a return 1%
higher than its beta would predict. An alpha of 1.0 means the fund produced a return 1%
lower. If a fund returns more than its beta then it has a positive alpha and if it returns less
then it has a negative alpha. Once the beta of a fund is known, alpha compares the fund's
performance to that of the benchmark's risk-adjusted returns. It allows you to ascertain if
the fund's returns outperformed the market's, given the same amount of risk.
The higher a funds risk level, the greater the returns it must generate in order to produce a
high alpha.
Normally one would like to see a positive alpha for all of the funds owned. But a high
alpha does not mean a fund is doing a bad job nor is the vice versa true as alpha measures
the out performance relative to beta. So the limitations that apply to beta would also
apply to alpha.
Alpha can be used to directly measure the value added or subtracted by a fund's manager.
The accuracy of an alpha rating depends on two factors:

1) The assumption that market risk, as measured by beta, is the only risk measure
necessary;
2) The strength of fund's correlation to a chosen benchmark such as the BSE Sensex or
the NIFTY.
5. Sharpe Ratio
Sharpe Ratio= Fund return in excess of risk free return/ Standard deviation of Fund
In case funds have low correlation with indices or benchmarks, they should be evaluated
using the Sharpe ratio. Since it uses only the Standard Deviation, which measures the
volatility of the returns there is no problem of benchmark correlation.
The higher the Sharpe ratio, the better a funds returns relative to the amount of risk taken.
Sharpe ratios are ideal for comparing funds that have a mixed asset classes. That is
balanced funds that have a component of fixed income offerings.

ADVANTAGES OF INVESTING IN MUTUAL FUNDS:
1. Portfolio diversification-
2. Professional management
3. Reduction in risk
4. Reduction of transaction costs
5. Liquidity
6. Convenience and flexibility
DISADVANTAGES OF INVESTING IN MUTUAL FUNDS:
1. No control over costs: Since investors do not directly, monitor the fund’s operations
they cannot control the costs effectively. Regulators therefore usually limit the expenses
of mutual funds.
2. No tailor made portfolios: Mutual fund portfolios are created and marketed by AMCs
into which investors invest. They cannot create tailor made portfolios.
3. Managing a portfolio of funds: As the numbers of mutual funds increase, in order to
tailor a portfolio for him, an investor may be holding a portfolio of funds, with the costs
of monitoring them and using them, being incurred by him.

TYPES OF MUTUAL FUNDS
• By Structure
o Open - Ended Schemes
o Close - Ended Schemes
o Interval Schemes
• By Investment Objective
o Growth Schemes
o Income Schemes
o Balanced Schemes
o Debt Schemes
o Money Market Schemes
• Other Schemes
o Tax Saving Schemes
o Load & No Load Schemes
o Special Schemes
 Index Schemes
 Sector Specific Scheme
 Gilt Funds

Performance of Diversified Funds

Criticism of managed mutual funds
Historically, only a small percentage of actively managed mutual funds, over long
periods of time, have returned as much, or more than comparable index mutual funds.
This, of course, is a criticism of one type of mutual fund over another.
Another criticism concerns sales commissions on load funds, an upfront or deferred fee
as high as 8.5 percent of the amount invested in a fund. Critics point out those high sales
commissions can sometimes represent a conflict of interest, as high commissions benefit
the sales people but hurt the investors. Although in reality, "A shares", which appear to
have the highest up front load, (around 5%) are the "cheapest" for the investor, if the
investor is planning on 1) keeping the fund for more than 5 years, 2) investing more than
100,000 in one fund family, which likely will qualify them for "breakpoints”, which is a
form of discount, or 3) staying with that "fund family" for more than 5 years, but
switching "funds" within the same fund company. High commissions can sometimes
cause sales people to recommend funds that maximize their income.
Mutual fund managers and companies need to disclose by law, if they have a conflict of
interest due to the way they are paid. In particular fund managers may be encouraged to
take more risks with investor’s money than they ought to: Fund flows (and therefore
compensation) towards successful, market beating funds are much larger than outflows
from funds that lose to the market. Fund managers may therefore have an incentive to
purchase high risk investments in the hopes of increasing their odds of beating the market
and receiving the high inflows, with relatively less fear of the consequences of losing to
the market (1).
Many analysts, however, believe that the larger the pool of money one works with, the
harder it is to manage actively, and the harder it is to squeeze good performance out of it.
This is true, due to the fact that there are only so many companies that one can identify to
put the money into ( buy shares of) that fit with the "style" of the mutual fund, due to
what is disclosed in the prospectus. Thus some fund companies can be focused on
attracting new customers, and forget to "close" their mutual funds to new customers,
when they get too big, to invest the assets properly, thereby hurting its existing investors'
performance. A great deal of a fund’s costs is flat and fixed costs, such as the salary for
the manager. Thus it can be more profitable for the fund to try to allow it to grow as large
as possible, instead of limiting its assets. Most fund companies have closed some funds to
new investors to maintain the integrity of the funds for existing investors. If the funds
reach more than 1 billion dollars, many times, these funds, have gotten too large, before
they are closed, and when this happens, the funds tend to not have a place to put the
money and can and tend to lose value.

Other criticisms of mutual funds are that some funds illegally are guilty of market timing
and that some fund managers, also illegal, accept extravagant gifts in exchange for
trading stocks through certain investment banks, which presumably charge the fund more
for transactions than would non-gifting investment bank.
Challenges for the MF industry
The MF has been positioning itself as a growth and sunrise industry, they have been set
up with the purpose of mobilising savings of the households and invest the proceeds in
stock markets. Their performance on both these accounts has not been encouraging as the
total assets under management for the past few years have remained stagnant and they
have not been major players in stock markets.
The industry has seen shifting of assets from one asset class to another and one fund
house to another without any significant growth in aggregate assets.
Mutual funds in their present state are focused only in major metros and mini metros,
thus a large section of potential investors remains outside the reach of the industry.
Though attempts have been made to expand the reach, for eg. Indian Post and IDBI-
principle launched a scheme for distribution through select post offices.
Apart from reach, mutual fund products are perceived to complex by investors, though
various awareness programmes are being carried out to educate the investors. Recently,
various investor awareness programs have been conducted by the MFs. Also, to foster
professional standards in the operations of MFs, AMFI in association with the NSE has
developed a self-study and testing/certification programme for the employees and
distributors of MFs. Further, AMFI in consultation with the SEBI, has made it mandatory
to all existing personnel of MFs/AMCs, who are engaged in sales, marketing and
employees to complete the certification process. Despite these efforts, their reach is
limited and awareness among the investors is still low.
The biggest problem with MFs is that they have failed to demonstrate effectiveness of
their investment process for generating sustainable investment return with a few
exceptions. As a result, MFs are seen as momentum chasers rather than professional
investment managers. Hence the assets have been garnered based on performance of the
MF rather than confidence of the investors. This is reflected in the pattern of flow of
funds whereby the last quarter performance is the biggest driver for attracting money.
The MF needs to demonstrate robustness of their investment management process rather
than last quarter return to ensure investor participation through the ups and downs of the
market. Investors need to choose the fund based on its process rather than the end result.
This has forced the MFs to be short-termism and thereby hampered the growth of the MF
industry. In the developed countries, MF mobilise amounts at par with banks, but in India
they are no where near the deposits moblised by the banks.

ULIP Vs MUTUAL FUND
Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual
funds in terms of their structure and functioning. As is the case with mutual funds,
investors in ULIPs are allotted units by the insurance company and a net asset value
(NAV) is declared for the same on a daily basis.
Similarly ULIP investors have the option of investing across various schemes similar to
the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds
and debt funds to name a few.
Mutual fund investors have the option of either making lump sum investments or
investing using the systematic investment plan (SIP) route which entails commitments
over longer time horizons. The minimum investment amounts are laid out by the fund
house.
ULIP investors also have the choice of investing in a lump sum (single premium) or
using the conventional route, i.e. making premium payments on an annual, half-yearly,
quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting
point for the investment activity.
If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt
from the same fund house, he could have to bear an exit load and/or entry load.
On the other hand most insurance companies permit their ULIP inventors to shift
investments across various plans/asset classes either at a nominal or no cost (usually, a
couple of switches are allowed free of charge every year and a cost has to be borne for
additional switches).
ULIPs vs Mutual Funds
ULIPs Mutual Funds

Minimum investment
Determined by the amounts are
Investment investor and can determined by the
amounts be modified as well fund house

No upper limits, Upper limits for
expenses expenses chargeable
determined by the to investors have
insurance been set by the
Expenses company regulator
Quarterly disclosures
Portfolio disclosure Not mandatory* are mandatory
Generally
permitted for free Entry/exit loads have
Modifying asset or at a nominal to be borne by the
allocation cost investor
Section 80C Section 80C benefits
benefits are are available only on
available on all investments in tax-
Tax benefits ULIP investments saving funds
With these comparable there are certain factors where in these two differ. Mutual funds
are essentially short to medium term products. The liquidity that these products offer is
valuable for investors. ULIPs, in contrast, are positioned as long-term products and going
ahead, there will be separate playing fields for ULIPS and MFs, with the product
differentiation between them becoming more pronounced. ULIPs do not seek to replace
mutual funds, they offer protection against the risk of dying too early, and also help
people save for retirement. Insurance has to be an integral part of one's wealth
management portfolio. Further, exposure of Indian households to capital markets is
limited.
ULIPs and mutual funds are, therefore, not likely to cannibalize each other in the long
run. The primary objective of an insurance product is protection. The whole reason why
it has evolved as a savings plan in the minds of certain people is because there is a
significant savings component attached to it; however, it is still not the primary purpose
of the plan. Second, there are various kinds of insurance products; the element of
protection in each varies. In certain plans the level of protection is low and the savings
component high, but that is a choice to the customer.
While ULIPs as an investment avenue is closest to mutual funds in terms of their

functioning and structure, the first and foremost purpose of insurance is and will always
be 'protection'. The value that it provides cannot be downplayed or underestimated. As an
instrument of protection, insurance provides benefits that no investment can offer. It is
important for an investor to understand his financial goals and horizon of investment in
order to make an informed investment decision. The decision to invest in either a mutual
fund or a ULIP should depend on the time period of investment, individual financial
goals as well as risk taking appetite, and it’s about time the industry and customer realise
it.

SURVEY
As a part of the project, in order to know the perceptions of the investors about the
investment schemes basically in insurance policy, ulip, bank deposits, NSC, a survey was
conducted in New Delhi region.
OBJECTIVE OF THE SURVEY:

• To know the existing investment pattern among different age groups and different
occupations.
• To know the present portfolio of the investors, their perceptions about different
investment schemes, their investment concerns, their present returns, and their
future expectations from different investment schemes.
• To know the popularity and acceptability of todays investment schemes.
• To know the potential of customers investments according to their stability of
income.
RESEARCH METHODOLOGY
The survey process involved two phases: First phase included identification and selection
of the target audience to be studied and to determine the parameters on which
respondents will justify their preferences. The audience were targeted and analyzed
basically on the basis of three important parameters: Age, Occupations and Income.
Demographical information was also taken in order to know the investment patterns
according to the location, age, gender etc. A questionnaire was designed to collect the
needed information from the respondents.

In the second phase data was collected through questionnaire from about 50 respondents
within NEW DELHI region. Results were viewed cautiously as sample was from a
specific population.
The responses that were generated during this exercise were converted in the form of
percentages to have a comparative outlook, as the numbers itself cannot explain the true
picture. These percentages were then represented through the simple tools like bar
graphs, line graphs.

QUESTIONNAIRE
Name :___________________________________________________
Age: __24____________________ Sex___male__________________________
Q1) Your annual income
A) Below Rs1,00,000 [ ] B) Rs1,00,000 -1,50,000 [a ]

C) Above Rs1,50,000 [ ]
Q2) Your annual saving
A) Upto 10,000 [ ] B) 10,000-50,000 [ ]

C) Above 50,000 [ ]
Q3) You would describe your financial situation as being:
A) Very unstable [ ] B)Somewhat unstable [ ]

C) Moderately stable [ ] D)Stable [ ]
E) Very stable [ ]
Q4) Most preferable mode to save the income
A) Saving A/c [ ] B) Insurance [ ]

C) Share market [ ] D) Mutual Fund [ ]
E) ULIP [ ] F) Others [ ]
Q5) Motive of investment
A) Future uncertainty [ ] B) Higher return [ ]

C) Family requirement [ ] D) Old age security [ ]
Q6) Maximum period of investment
A) Less than 6 month [ ] B) 6 month -1 year [ ]

C) 1-3 year [ ] D) More than 3Year [ ]

Q7) Are Mutual Funds an important investment strategy in today s scenario ?
A) Strongly Disagree B) Disagree
C) Neutral D) Agree
E) Strongly Agree
Q8) Is ULIP an important investment strategy in today s scenario ?
A) Strongly Disagree B) Disagree
C) Neutral D)Agree
E) Strongly Agree

Graph of annual income and annual savings of people
50
45
40
35
30 >50000
25 10000-50000
20 <10000
15
10
5
0
<100000 100000- >150000
150000
ANALYSIS
I: 2% people who earn below 1,00,000 save up to 10,000

II: 66% people who earn above 1,50,000 save over 50,000

III: 28% people who earn between 1,00,000 to 1,50,000 save up to
10,000-50,000
IV: 4% people who between 1,00,000 to 1,50,000 save up to 10,000
Graph of annual savings and financial situation
very unstable
somewhat
>50000 unstable
moderate
10000- stable
50000 stable
<10000 very stable
0 10 20 30
ANALYSIS

I: 40% people who save above50,000 said that their financial situation
is stable
II: 18% people who save between 10,000 to 50,000 said that their
financial situation is stable
III: 10% people who above 50,000 said that their financial situation is
very stable
IV: 12% people who save between 10,000 to 50,000 said that their
financial situation is moderately stable
V: 6% people who save up to 10,000 said that their financial situation
is somewhat stable
VI: 8% people who save up to 10,000 said that their financial situation is
very stable
VII: 6% people who save above 50,000 said that their financial situation
is moderately stable
Graph of saving mode and motive of investment
25
20
future uncertanity
15 higher return
10 family requirement
old age security
5
0
d
/C
ce
n
es
s
A
lip
fu
er
n
ar
ra
g
th
al
n
sh
su
tu
o
vi
sa
u
in
ANAYLSIS
I: 14% people want to invest their income in ULIP for higher return
II: 8% people want to invest their income in share market for higher
return
III: 42% people want to invest their income in insurance for future

uncertainty
IV: 4% people want to invest their income in insurance for family
requirements
V: 4% people want to invest their income in share market for future
uncertainty
VI: 10% people want to invest their income in savings for future
uncertainty
VII: 8% people want to invest their income in mutual funds for higher
return
VIII: 2% people want to invest their income in ULIP for future uncertainty
IX: 2% people want to invest their income in insurance for old age
security
Graph of motive of investment and period of investment
old age
security
family <6month
requirement 6month-1yr
1-3yr
higher return
>3yr
future
uncertanity
0 10 20 30 40
ANALYSIS
I: 10% people want to invest their income for higher return but only for
1-3 years

II: 10% people want to invest their income for future uncertainty but
only for 1-3 years
III: 42% people want to invest their income for future uncertainty but
only up to 3 years
IV: 14% people want to invest their income for higher return for more
than 3years
V: 10% people want to invest their income for future uncertainty but
only for 6-12months
Graph of saving mode and financial situation of people
18
16
14 saving A/C
12 insurance
10 share
8 mutual fund
6 ulip
4
other
2
0
very somewhat moderate stable very
unstable unstable stable stable
ANALYSIS

I: 34% people invest their income in insurance and their financial
situation is stable
II: 18% people invest their income in ULIP and their financial situation
is stable
III: 14% people invest their income in insurance and their financial
situation is moderately stable
IV: 4% people invest their income in mutual funds and their financial
situation is stable
V: 6% people invest their income in share market and their financial
situation is very stable
Ranking of Preferences of Investments
18-24 25-40
Preference of mutual fund Preference of mutual fund
11%
33%
56%
100% 1Rank
1Rank
2Rank
2Rank
3Rank 3Rank
3Rank
4Rank
4Rank
5Rank
5Rank
40-60 60 & Above
Preference of mutual fund Preference of mutual fund

5%
33% 16%
36%
67%
32%
11%
1Rank
1Rank
2Rank
2Rank
3Rank
3Rank
4Rank
4Rank
5Rank
5Rank
Analysis
In the above Pie Charts,
1 RANK - Strongly Disagree

2 RANK - Disagree
3 RANK - Neutral
4 RANK - Agree
5 RANK - Strongly Agree
In the 18-24 age bracket people are neutral about mutual fund investments. They are not
risk takers. People in age bracket 25-40, 56% of the people find it least preferred
investment strategy by giving it a 2nd rank. Majority of the people in 40-60 bracket feel
investing in mutual fund to be least preferred investment strategy. But we find a reverse
situation in case of age bracket of 60 & above with 36% people opting mutual fund as the
most preferred investment and 32% have neutral opinion about mutual fund.

25-40 40-60
Preference of ULIP Preference of ULIP
14% 14% 17%
32%
14%
17%
29%
29% 17% 17%
1Rank
1Rank
2Rank
2Rank
3Rank
3Rank
4Rank
4Rank
5Rank
5Rank
60 & Above
Preference of ULIP
6%
28%
49%
11%6% 5Rank
1Rank
3Rank
2Rank
Analysis
Mixed opinion is observed for preference and awareness of ULIP in all age brackets.
Findings reveal that 14% people in 25-40 age bracket feel that ULIP in an important
investment strategy in today’s scenario. Their preference reveals that in future they might
opt for ULIP in future. 32 % of the people in 40-60 age bracket have ranked ULIP as
most preferred investment strategy. People in age bracket 18-24 have no opinion about
ULIP but 49% of the people in 60 & above bracket fell it most preferred investment.

CONCLUSION:
1. 66% people who earn above 1,50,000 save over 50,000

2. 40% people who save above50,000 said that their financial situation is stable
3. 42% people want to invest their income in insurance for future uncertainty
4. 42% people want to invest their income for future uncertainty but only up to 3
years
5. 34% people invest their income in insurance and their financial situation is stable
6. In the 18-24 age bracket people are neutral about mutual fund investments. They
are not risk takers. People in age bracket 25-40, 56% of the people find it least
preferred investment strategy by giving it a 2nd rank. Majority of the people in 40-
60 bracket feel investing in mutual fund to be least preferred investment strategy.
But we find a reverse situation in case of age bracket of 60 & above with 36%
people opting mutual fund as the most preferred investment and 32% have neutral
opinion about mutual fund.
7.ULIP in an important investment strategy in today’s scenario. Their preference
reveals that in future they might opt for ULIP in future. 32 % of the people in 40-60
age bracket have ranked ULIP as most preferred investment strategy.


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Summer Internship Project Report

Analysis of Investment Activities

Submitted in partial fulfillment of the requirement for the award of

Submitted By: Under the supervision of:

NIIM - School of Business Administration

I, Deepak Asnora, a bonafide student of PGDBM at the NIIM – School of Business

Place: New Delhi Deepak Asnora

Date: 29-05-09 Roll No.-SBAJU08009

Summer internship report/Deepak Asnora/SBAJU08009 2

Summer internship report/Deepak Asnora/SBAJU08009 3

Summer internship report/Deepak Asnora/SBAJU08009 4

Software used: Excel

Summer internship report/Deepak Asnora/SBAJU08009 5

Summer internship report/Deepak Asnora/SBAJU08009 6

New Business Opportunities tapped by banks

Wealth Selling of Mutual

Major foreign banks in India are:

Summer internship report/Deepak Asnora/SBAJU08009 7

Summer internship report/Deepak Asnora/SBAJU08009 8

• Wealth accumulation: This is largely a factor of investment performance,

Summer internship report/Deepak Asnora/SBAJU08009 9

• Income: This refers to money distributed at intervals by an investment, which are

• Simplicity: Investment instruments are complex, but investors need to understand

• Communication: This refers to informing and educating investors about the

Summer internship report/Deepak Asnora/SBAJU08009 10

Summer internship report/Deepak Asnora/SBAJU08009 11

Choosing the Right Investment Options

Liquidity - how accessible money is?

Safety - what is the risk involved?

Return - what can you expect to get back on your investment?

Summer internship report/Deepak Asnora/SBAJU08009 12

Summer internship report/Deepak Asnora/SBAJU08009 13

 Need Analysis and Profiling

Finally a continuous watch on the portfolio is extremely important. Fundamental analysis

Summer internship report/Deepak Asnora/SBAJU08009 14

Summer internship report/Deepak Asnora/SBAJU08009 15

Conventionally, Indian investors were investing in the following avenues:

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

Summer internship report/Deepak Asnora/SBAJU08009 16

Summer internship report/Deepak Asnora/SBAJU08009 17

Summer internship report/Deepak Asnora/SBAJU08009 18

Summer internship report/Deepak Asnora/SBAJU08009 19

Portfolio management is the professional management of various securities (shares,

The provision of portfolio management services includes elements of financial analysis,

PORTFOLIO MANAGEMENT PROCESS

Summer internship report/Deepak Asnora/SBAJU08009 20

Summer internship report/Deepak Asnora/SBAJU08009 21

Summer internship report/Deepak Asnora/SBAJU08009 22

Summer internship report/Deepak Asnora/SBAJU08009 23

Standard Chartered Bank in India

Summer internship report/Deepak Asnora/SBAJU08009 24

MORE THAN BANKING:

Summer internship report/Deepak Asnora/SBAJU08009 25

Summer internship report/Deepak Asnora/SBAJU08009 26

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

2. SME BANKING: SME Banking provides integrated financial solutions to small

3. COMMERCIAL BANKING: Standard Chartered has maintained a long local

Summer internship report/Deepak Asnora/SBAJU08009 27

1. Savings Account : Personal banking

Summer internship report/Deepak Asnora/SBAJU08009 28

ELIGIBILITY (IN GENERAL)

• Clubs, Associations, Trusts and Registered Societies

• HUF (Hindu Undivided Family)