Академический Документы
Профессиональный Документы
Культура Документы
"Banking in the most general sense, is meant the business of receiving, conserving &
utilizing the funds of community or of any special section of it."
-By H.Wills & J. Bogan
"A banker of bank is a person, a firm, or a company having a place of business where
credits are opened by deposits or collection of money or currency or where money is
advanced and waned.
-By Findlay Sheras
Thus
A Bank:
The bank of England was formed in 1694 to borrow money from the public for the
government to finance the war of Augsburg against France. By 1709, goldsmith were
using bank of England notes of their own receipts.
New technology transformed the banking industry in the 1900s round the world,
banks merged into larger and fewer groups and expanded into other country.
Banking in India has a long and elaborate history of more than 200 years. The
beginning of this industry can be traced back to1786, when the countrys first bank,
Bank of Bengal, was established. But the industry changed rapidly and drastically,
after the nationalization of banks in 1969.
Indian Banking sector is dominated by Public sector banks (PSBs) which accounted
for 72.6% of total advances for all SCBs as on 31st March 2008. PSBs have rapidly
expanded their foot prints after nationalization of banks in India in 1969 and further in
1980. Although there is a restrictive entry/expansion for private and foreign banks in
India, these banks have increased their presence and business over last 5 years.
Peculiar characteristic of Indian banks unlike their western counterparts such as high
share of household savings in deposits (57.4% of total deposits), adequate
capitalization, stricter regulations and lower leverage makes them less prone to
financial crisis, as was seen in the western world in mid FY09.
The Scheduled Commercial Banks (SCBs) in India have shown an impressive growth
from FY04 to the mid of FY09. Total deposits, advances and net profit grew at CAGR
of 19.6%, 27.4% and 20.2% respectively from FY03 to FY08. Banking sector
recorded credit growth of 33.3% in FY05 which was highest in last 2 and half decades
and credit growth in excess of 30% for three consecutive years from FY04 to FY07,
which is best in the banking industry so far. Increase in economic activity and robust
primary and secondary markets during this period have helped the banks to garner
larger increase in their fee based incomes.
FUNCTIONS OF BANKS
Primary Functions
Acceptance of Deposits
Making loans & advances
Loans
Overdraft
Cash Credit
Discounting of bills of exchange
Secondary Functions
Agency functions
Collection of cheques & Bills etc.
Collection of interest and dividends.
Making payment on behalf of customers
Purchase & sale of securities
Facility of transfer of funds
To act as trustee & executor.
Utility Functions
Safe custody of customers valuable articles & securities.
Underwriting facility
Issuing of travellers cheque letter of credit.
Facility of foreign exchanges
Providing trade information
Provide information regarding credit worthiness of their customer.
STRUCTURE
The Indian banking system can be classified into nationalized banks, private banks
and specialized banking institutions. The industry is highly fragmented with 30
banking units contributing to almost 50% of deposits and 60% of advances. The
Reserve Bank of India is the foremost monitoring g body in the Indian Financial
sector. It is a centralized body that monitors discrepancies and shortcomings in the
system.
Banking segment in India functions under the umbrella of Reserve Bank of India
(RBI) the regulatory, central bank. This segment broadly consists of:
1. Commercial Banks
2. Co-operative Banks
The commercial banking structure in India consists of:
1. Schedule Commercial Banks
2. Unscheduled Banks
Schedule Commercial Banks constitute of those banks, which have included second
schedule of Reserve Bank of India (RBI) act 1934. RBI in turn includes only those
banks in this schedule that satisfy the criteria laid down vide section 42 (60 of the act)
this sub sector can broadly classified into:
1. Public Sector
2. Private Sector
3. Foreign Sector
Public sector banks have either government of India Reserve Bank of India (RBI) as
the majority shareholder. This segment comprises of:
1. State Bank of India (SBI) and its subsidiaries
2. Other Nationalized Banks
Industry estimates indicate that out of 274 commercial banks operating in the country,
223 banks are in the public sector and 51 are in the private sector. These private sector
banks include 24 foreign banks that have begun their operations here. The specialized
banking institutions that include cooperatives, rural banks, etc. form a part of the
nationalized banks category.
Schedule Banks
State co-op
Banks
Non-Schedule Banks
Central co-op
Banks and
Primary Cr.
Societies
Societies
Commercial
Banks
Indian
Public Sector
Banks
Commercial Banks
Foreign
Private Sector
Banks
HDFC,
ICICI, etc.
ICICI etc.
State Bank of
India and its
Subsidiaries
Other Nationalized
Banks
10
Regional
Rural Banks
11
12
SAVING BANKS
The principle function of these banks is to collect small saving across the country and
put them into productive use. These banks have shown marked development in
Germany & Japan. These banks are established in HAMBURG City of Germany in
1765. In India a department of post offices functions as a saving banks.
FOREIGN EXCHANGE BANKS
These are special types of banks which specialize in financing foreign trade. Their
main function is to make international payments through purchase & sale of exchange
bills. As it well known, the exporters of a country prefer to receive the payments for
exports in their own currency. Thus these banks convert home currency into foreign
currency and vice versa. It is on this account that these banks have to keep with
themselves stock of the currency of various countries. Along with that, they have to
open branches in foreign countries to carry on their business
INDUSTIRAL BANKS
The industrial banks extend long term loans to industries. In fact, they also help
industrials firms to sell their debentures and shares. Sometimes, they even underwrite
the debentures & shares of big industrial concerns.
These banks found their origin in India. These banks made a significant contribution
to the development of agricultural and industries before independence. Mahajans,
rural moneylenders and jewellers have been the forerunner of these banks in India.
13
INDIGENIOUS BANKS
These banks found their origin in India. These banks made a significant contribution
to the development of agricultural and industries before independence. Mahajans,
rural moneylenders and jewellers have been the forerunner of these banks in India.
CENTRAL BANK
The central bank occupies a pivotal position in the monetary and banking structure of
the country. The central bank is the undisputed leader of the money market. As such it
supervises controls and regulates the activities of commercial banks affiliated with it.
The central bank is also the higher monetary institution in the country charged with
the duty & responsibility of carrying out the monetary policy formulated by the
government. India's central bank known as the reserve bank of India was set up in
1935.
AGRICULTURAL BANK
The commercial and the industrial banks are not in a position to meet the credit
requirements of agriculture. Hence, there arises the need for setting up special type of
banks of finance agriculture. The credit requirements of the farmers are two types.
Firstly the farmers require short term loans to buy seeds, fertilizers, ploughs and other
inputs. Secondly, the farmers require long-term loans to purchase land, to effect
permanent improvements on the land to buy equipment and to provide for irrigation
works. There are two types of agriculture banks.
1.
2.
14
OPPORTUNITIES
The Banking sector is considered the most lucrative option in todays job market. In
the industry, a position in Treasury or Forex is considered right on top and this is
followed by careers in Private Banking, Investment Banking and Retail Banking. One
could work in a variety of areas in banking industry including Recurring Deposit
account, banking officer, probationary officer, loan officer, assessor, personal loan
officer, home loan officer, home loan agent, loan manager, mortgage loan
underwriter, loan processing officer, accountant, product marketing and sales
executive, and customer service executive among others.
In the Financial Services, some of the important jobs include that of a stockbroker
who is essentially a person who buys and sells securities on behalf of individuals and
institutions for some commission. While some brokers like to practice with individual
clients others work for institutions. Brokers who work for institutional investors are
often called securities traders. Many prefer to work as dealers, advisors and securities
analysts. Security analysts are those who advise companies on floatations of shares
as they are expected to have sound knowledge of capital markets.
Investment analysts are the backbone of the financial services sector. They study the
financial reports of companies, assess various statistical information, profitability
projections, compare financial results, survey the industry as a whole and on the basis
of the available information, and finally conclude to a decision. Equity Analysts do
jobs similar to investment analysts and research the equity markets and make
predictions.
15
16
17
The Indian mutual fund industry follows a 3-tier structure as shown below:
1. Sponsors
They are the individuals who think of starting a mutual fund. The Sponsor approaches
SEBI, the market regulator and also the regulator for mutual funds. Not everyone can
start a mutual fund. SEBI will grant a permission to start a mutual fund only to a
person of integrity, with significant experience in the financial sector and a certain
minimum net worth. These are just some of the factors that come into play.
2. Trust
Once SEBI is satisfied with the credentials and eligibility of the proposed Sponsors,
the Sponsors then establish a Trust under the Indian Trust Act 1882. Trusts have no
legal identity in India and thus cannot enter into contracts. Hence the Trustees are the
individuals authorized to act on behalf of the Trust. Contracts are entered into in the
name of the Trustees. Once the Trust is created, it is registered with SEBI, after which
point, this Trust is known as the mutual fund.
18
19
20
Amount Mobilized
Assets Under
Mobilization as %
Management
of gross Domestic
Savings
UTI
11,057
38,247
5.2%
Public Sector
1,964
8,757
0.9%
Total
13,021
47,004
6.1%
21
22
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.
The Assets under Management (AUM) have grown at a rapid pace over the past few
years at a CAGR of 35% for the past few years at a CAGR of 35 percent for the fiveyear period from 31 March, 2005 to 31 March, 2009. Over the 10-year period from
1999 to 2009 encompassing varied economic cycles, the industry grew at 22%
CAGR.
The Indian mutual fund industry has shown relatively slow growth in the period from
year 2010-2013 growing at a CAGR of approximately 3.2 per cent. Average (AUM)
stood at INR 8,140 billion as of September 2013. However, AUM increased to INR
8,800 billion as of December 2013.
WHAT IS AN INVESTMENT?
In finance, the purchase of a financial product or other item of value with an
expectation of favourable future returns. In general terms, investment means the use
money in the hope of making more money.
There are three fundamentals of investment:
Safety
Liquidity
Return
23
INVESTMENT AVENUES
Investments
Debt
Small
Savings
Insurance
Equity
RBI
Bonds
Primary
Market
Secondary
Market
PPF
Post Office
1) Post Office
Mutual Funds
Property
Foreign Exchange
6) Insurance
7) Company Debentures
8) Company Fixed Deposits
9) Infrastructure Bonds
24
Pool their surplus funds and collectively invest in instruments / assets for a
common investment objective.
Benefit from the economies of scale which size enables and is not
available on an individual basis. Investing in a mutual fund is like an
investment made by a collective.
26
For example:
Then his total contribution to the fund is Rs. 50 (i.e. Number of units held
multiplied by the NAV of the scheme).
27
These regulations have since been replaced by the SEBI (Mutual Funds) Regulations,
1996. The structure indicated by the new regulations is indicated as under. A mutual
fund comprises four separate entities, namely sponsor, mutual fund trust, AMC and
custodian. The sponsor establishes the mutual fund and gets it registered with SEBI.
The mutual fund needs to be constituted in the form of a trust and the instrument of
the trust should be in the form of a deed registered under the provisions of the Indian
Registration Act, 1908.
The Custodian maintains the custody of the securities in which the scheme invests. It
also keeps a tab on corporate actions such as rights, bonus and dividends declared by
the companies in which the fund has invested. The Custodian is appointed by the
Board of Trustees. The Custodian also participates in a clearing and settlement system
through approved depository companies on behalf of mutual funds, in case of
dematerialized securities.
The sponsor is required to contribute at least 40% of the minimum net worth (Rs. 10
crore) of the asset management company. The board of trustees manages the MF and
the sponsor executes the trust deeds in favour of the trustees. It is the job of the MF
trustees to see that schemes floated and managed by the AMC appointed by the
trustees are in accordance with the trust deed and SEBI guidelines
28
TYPES OF RETURN
There are three ways, where the total returns provided by mutual funds can be
enjoyed by investors:
Income is earned from dividends on stocks and interest on bonds. A fund pays
out nearly all income it receives over the year to fund owners in the form of a
distribution.
If the fund sells securities that have increased in price, the fund has a capital
gain. Most funds also pass on these gains to investors in a distribution.
If fund holdings increase in price but are not sold by the fund manager, the
fund's shares increase in price. You can then sell your mutual fund shares for a
profit. Funds will also usually give you a choice either to receive a check for
distributions or to reinvest the earnings and get more shares.
29
The MPT is a standard financial and academic methodology used for assessing the
performance of equity, fixed-income and mutual fund investments by comparing them
to market benchmarks.
All of these risk measurements are intended to help investors determine the riskreward parameters of their investments. In this article, we'll give a brief explanation of
each of these commonly used indicators.
30
may
default
in
payment
of
interest/principal
on
their
32
Initial Investment
1000
10
100
1000
8.20
121.95
1000
7.40
135.14
1000
6.10
163.93
1000
5.40
185.19
1000
6.00
166.67
1000
8.20
121.95
1000
9.25
108.11
1000
10.00
100.00
1000
11.25
88.89
10
1000
13.40
74.63
11
1000
14.40
69.44
TOTAL
12,000
1,435.90
33
TYPES OF RISKS
All investments involve some form of risk. Even an insured bank account is subject to
the possibility that inflation will rise faster than your earnings, leaving you with less
real purchasing power than when you started (Rs. 1000 gets you less than it got your
father when he was your age).
Consider these common types of risk and evaluate them against potential rewards
when you select an investment.
34
Market Risk
At times the prices or yields of all the securities in a particular market rise or fall due
to broad outside influences. When this happens, the stock prices of both an
outstanding, highly profitable company and a fledgling corporation may be affected.
This change in price is due to "market risk".
Inflation Risk
Sometimes referred to as "loss of purchasing power." Whenever inflation sprints
forward faster than the earnings on your investment, you run the risk that you'll
actually be able to buy less, not more. Inflation risk also occurs when prices rise faster
than your returns.
Credit Risk
In short, how stable is the company or entity to which you lend your money when you
invest? How certain are you that it will be able to pay the interest you are promised, or
repay your principal when the investment matures?
Interest Rate Risk
Changing interest rates affect both equities and bonds in many ways. Investors are
reminded that "predicting" which way rates will go is rarely successful. A diversified
portfolio can help in offsetting these changes.
Exchange Risk
35
Investment Risk
Changes in Government policy especially in regard to the tax benefits may impact the
business prospects of the companies leading to an impact on the investments made by
the fund.
REGULATORY AUTHORITIES
To protect the interest of the investors, SEBI formulates policies and regulates the
mutual funds. It notified regulations in 1993 (fully revised in 1996) and issues
guidelines from time to time. MF either promoted by public or by private sector
entities including one promoted by foreign entities is governed by these Regulations.
SEBI approved Asset Management Company (AMC) manages the funds by making
investments in various types of securities. Custodian, registered with SEBI, holds the
securities of various schemes of the fund in its custody.
According to SEBI Regulations, two thirds of the directors of Trustee Company or
board of trustees must be independent. The Association of Mutual Funds in India
(AMFI) reassures the investors in units of mutual funds that the mutual funds function
within the strict regulatory framework. Its objective is to increase public awareness of
the mutual fund industry. AMFI also is engaged in upgrading professional standards
and in promoting best industry practices in diverse areas such as valuation, disclosure,
transparency etc.
36
2%
AXIS
2%
DSP BlackRock
3%
Kotak Mahindra
4%
Franklin Templeton
6%
IDFC
4%
SBI
7%
UTI
8%
HDFC
13%
ICICI Prudential
Reliance
13%
12%
38
1. Open-ended schemes
These funds are sold at the NAV based prices, generally calculated on every business
day. These schemes have unlimited capitalization, open-ended schemes do not have a
fixed maturity - i.e. there is no cap on the amount you can buy from the fund and the
unit capital can keep growing. These funds are not generally listed on any exchange.
39
Open-ended funds are bringing in a revival of the mutual fund industry owing to
increased liquidity, transparency and performance in the new open-ended funds
promoted by the private sector and foreign players. Open-ended funds score over
close-ended ones on several counts. Some of these are listed below:
a) Any time exit option: The issuing company directly takes the responsibility of
providing an entry and an exit. This provides ready liquidity to the investors and
avoids reliance on transfer deeds, signature verifications and bad deliveries.
b) Tax advantage: Though Budget 2004 proposals envisage a tax rate of 20.91 %
(Corporate investors) and 13.06875% (Non-Corporate investors) on dividend
distribution made by the Debt funds, the funds continue to remain attractive
investment vehicles. In equity plans there is no distribution tax.
c) Any time entry option: An open-ended fund allows one to enter the fund at any
time and even to invest at regular intervals (a systematic investment plan).
2. Close ended schemes
Schemes that have a stipulated maturity period, limited capitalization and the units are
listed on the stock exchange are called close-ended schemes.
These schemes have historically seen a lot of subscription. This popularity is
estimated to be on account of firstly, public sector MFs having floated a lot of closeended income schemes with guaranteed returns and secondly easy liquidity on
account of listing on the stock exchanges.
40
i) Growth Funds
These funds seek to provide growth of capital with secondary emphasis on dividend.
They invest in shares with a potential for growth and capital appreciation. Because
they invest in well-established companies where the company itself and the industry
in which it operates are thought to have good long-term growth potential, growth
funds provide low current income. Growth funds generally incur higher risks than
income funds in an effort to secure more pronounced growth.
These funds may invest in a broad range of industries or concentrate on one or more
industry sectors. Growth funds are suitable for investors who can afford to assume the
risk of potential loss in value of their investment in the hope of achieving substantial
and rapid gains.
They are not suitable for investors who must conserve their principal or who must
maximize current income.
41
42
Sector funds offer the opportunity for sharp capital gains in cases where the fund's
industry is "in favour" but also entail the risk of capital losses when the industry is out
of favour. While sector funds restrict holdings to a particular industry, other specialty
funds such as index funds give investors a broadly diversified portfolio and attempt to
mirror the performance of various market averages.
Index funds generally buy shares in all the companies composing the BSE Sensex or
NSE Nifty or other broad stock market indices. They are not suitable for investors
who must conserve their principal or maximize current income.
A summary is presented in the table below of the various funds and their
investment objectives.
44
Investment
Avenues
Fixed Deposits
Equity shares
TAX
Liquidity
Safety
Returns
Volatility
CONVENIENCE
BENEFIT
Low
Moderate
to high
Low
Moderate
Low
No
Moderate
Low
Uncertain
High
No
Moderate
Co.Debenture
Low
Moderate
Moderate
Moderate
No
Low
Co. Deposit
Low
Moderate
Low
Low
No
Low
Life Insurance
Low
High
Low
Low
Yes
Moderate
High
Moderate
Moderate
High
No
High
High
Moderate
Moderate
High
Yes
High
Moderate
High
Moderate
Low
Yes
Moderate
High
High
Low
Low
No
High
PPF
Low
High
Moderate
Low
Yes
Moderate
Post Office
High
High
Good
Low
Yes
Moderate
NSC
Low
High
Moderate
Low
Yes
Moderate
Gold
High
High
Moderate
Moderate
No
High
Moderate
High
Moderate
Low
No
Low
Low
Moderate
Variable
High
Yes
High
Moderate
High
Moderate
Moderate
No
High
Low
High
Moderate
Low
Yes
Moderate
Mutual Funds
(Open ended)
Mutual Funds
(close ended )
RBI Bonds
Bank Fixed
Deposit
Infrastructure
Bonds
Real Estate
Public sec. & FII
Bonds
National Savings
Certificate
45
Characteristics
FD's
Bonds
Mutual Funds
Accessibility
Low
Low
High
Tenor
Fixed(medium)
Fixed(Long)
No Lock-in
Min. Investment
Rs.1000
Rs.5000
Rs.5000
Tax Benefits
None
80L, 88
Dividend Tax-Free
Liquidity
Low
Very Low
Very High
Convenience
Medium
Tedious
Very High
Transparency
None
None
Very High
Equity Funds
Debt Funds
Funds
46
47
48
49
50
51
52
Jenson Model
Jenson's model proposes another risk adjusted performance measure. This measure
was developed by Michael Jenson and is sometimes referred to as the Differential
Return Method. This measure involves evaluation of the returns that the fund has
generated vs. the returns actually expected out of the fund given the level of its
systematic risk. The surplus between the two returns is called Alpha, which measures
the performance of a fund compared with the actual returns over the period. Required
return of a fund at a given level of risk (Bi) can be calculated as: Ri = Rf + Bi (Rm Rf)
Where, Rm is average market return during the given period. After calculating it,
alpha can be obtained by subtracting required return from the actual return of the
fund.
Higher alpha represents superior performance of the fund and vice versa. Limitation
of this model is that it considers only systematic risk not the entire risk associated
with the fund and an ordinary investor cannot mitigate unsystematic risk, as his
knowledge of market is primitive.
Fama Model
The Eugene Fama model is an extension of Jenson model. This model compares the
performance, measured in terms of returns, of a fund with the required return
commensurate with the total risk associated with it. The difference between these two
is taken as a measure of the performance of the fund and is called net selectivity.
The net selectivity represents the stock selection skill of the fund manager, as it is the
excess return over and above the return required to compensate for the total risk taken
53
by the fund manager. Higher value of which indicates that fund manager has earned
returns well above the return commensurate with the level of risk taken by him.
Required return can be calculated as: Ri = Rf + Si/Sm*(Rm - Rf)
Where, Sm is standard deviation of market returns. The net selectivity is then
calculated by subtracting this required return from the actual return of the fund.
Among the above performance measures, two models namely, Treynor measure and
Jenson model use systematic risk based on the premise that the unsystematic risk is
diversifiable. These models are suitable for large investors like institutional investors
with high risk taking capacities as they do not face paucity of funds and can invest in
a number of options to dilute some risks. For them, a portfolio can be spread across a
number of stocks and sectors.
However, Sharpe measure and Fama model that consider the entire risk associated
with fund are suitable for small investors, as the ordinary investor lacks the necessary
skill and resources to diversified. Moreover, the selection of the fund on the basis of
superior stock selection ability of the fund manager will also help in safeguarding the
money invested to a great extent.
54
LITERATURE REVIEW
Arzu Tektasetal (2005) states that An efficient asset-liability management requires
maximizing banks' profit as well as controlling and lowering various risks. This multiobjective decision problem aims to reach goals such as maximization of liquidity,
revenue, capital adequacy, and market share subject to financial, legal requirements
and institutional policies. This paper models asset and liability management (ALM) in
order to show how different managerial strategies affect the financial wellbeing of
banks during crisis.
Brent Finlay states that avoiding the top 7 business financing mistakes is a key
component in business survival. The key is to understand the causes and significance
of each so that the company is in a position to make better decisions.
No Monthly Bookkeeping
No Recorded Profitability
No Financing Strategy
Harris (2005) from the perspective of the chief financial officer, the concept of
working capital management is relatively straightforward: to ensure that the
organization is able to fund the difference between short-term assets and short-term
liabilities. In practice, though, working capital management has become the Achilles'
55
heel of scores of finance organizations, with many CFOs struggling to identify core
working capital drivers and the appropriate level of working capital.
As a result, companies can be limited in their ability to weather unforeseen or adverse
events and ensure that cash is readily available where it is needed, regardless of the
circumstances. By Understanding the role and drivers of working capital management
and taking steps to reach the 20 "right" levels of working capital, companies can
minimize risk, effectively prepare for uncertainty and improve overall performance.
M.K. Kolay (1997) writes the article which analyses the pros and cons of
different strategies to be adopted to manage and avoid working capital crisis situations
in any organization. The working capital position depends on many organizational
parameters which are interrelated and interdependent, and also vary over time. In such
a situation, the use of a system dynamics approach has been advocated to reflect the
relevant dynamic cause-and-effect relationships for the development of appropriate
long-term and short-term strategies.
56
COMPANY PROFILE
History of HDFC Bank
The housing development Finance Corporation Limited (HDFC) was amongst the
first to receive as in principal approval from the Reserve Bank of India (RBI) to set up
a bank in the private sector, as part of the RBIS liberalization of the Indian Banking
Industry.
The bank was incorporated in August 1994 in the name of HDFC Bank Limited, with
its registered office in Mumbai, India. The Bank commenced operation as a scheduled
Commercial Bank in January 1995
Leverage their technology platform and open, scale able systems to deliver
more products to more customers and to control operating costs.
Maintain their current high standards for asset quality through disciplined
credit risk management.
Develop innovative products and services that attract our targeted customers
and address inefficiencies in the Indian financial sector.
Continue to develop product and services that reduce our cost of funds.
Bank logo
Type
Private company
Traded as
BSE: 500180
NSE: HDFCBANK
NYSE: HDB
BSE SENSEX Constituent
CNX Nifty Constituent
Industry
Founded
August 1994
Headquarters
Area served
Worldwide
Key people
58
Products
Investment Banking
Investment Management
Wealth Management
Private Banking
Corporate Banking
Private Equity
Finance and Insurance
Consumer Banking
Mortgages
Credit Cards
Revenue
Profit
Total assets
Total equity
Number of
employees
Website
HDFCBank.com
59
Name
Designation
Shyamala Gopinath
Chair Person
Paresh Sukthankar
A N Roy
Director
Keki Mistry
Director
Renu Karnad
Director
Additional Director
Managing Director
Kaizad Bharucha
Executive Director
Bobby Parikh
Director
10
Partho Datta
Director
11
Malay Patel
Director
Other Detail:
Business Group
HDFC Group
Listings
ISIN No.
INE040A01018
Incorporation
31/12/1994
31/12/1995
60
Promoters
HDFC is Indias premier housing finance company and enjoys an impeccable track
record in India as well as in international markets. Since its inception in 1977, the
Corporation has maintained a consistent and healthy growth in its operations to
remain the market leader in mortgages. Its outstanding loan portfolio covers well over
a million dwelling units. HDFC has developed significant expertise in retail mortgage
loans to different market segments and also has a large corporate client base for its
housing related credit facilities. With its experience in the financial markets, strong
market reputation, large shareholder base and unique consumer franchise, HDFC was
ideally positioned to promote a bank in the Indian environment.
Capital Structure
As on 31st March, 2015 the authorized share capital of the Bank is Rs. 550 crore. The
paid-up share capital of the Bank as on the said date is Rs501,29,90,634/(2506495317 ) equity shares of Rs. 2/- each). The HDFC Group holds 21.67 % of the
Bank's equity and about 18.87 % of the equity is held by the ADS / GDR Depositories
(in respect of the bank's American Depository Shares (ADS) and Global Depository
Receipts (GDR) Issues). 32.57 % of the equity is held by Foreign Institutional
Investors
(FIIs)
and
the
Bank
has
4,41,457
shareholders.
The shares are listed on the Bombay Stock Exchange Limited and The National Stock
Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed
on the New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's
Global Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under
ISIN No US40415F2002
61
Total balance sheet size as of June 30, 2016 was Rs.755,100crores as against
Rs.629,322 crores as of June 30, 2015. The Banks total income for the quarter ended
June 30, 2016 was Rs.19,322.6 crores, as against Rs.16,503.0 crores for the quarter
ended June 30, 2015. Net revenues (net interest income plus other income) increased
by 19.6% to Rs.10,588.1 crores for the quarter ended June 30, 2016 as against
Rs.8,850.7 crores in the corresponding quarter of the previous year.
Distribution Network
HDFC Bank is headquartered in Mumbai. As of March 31, 2015, the Banks
distribution network was at 4,014 branches in 2,464 cities. All branches are linked on
an online real-time basis. Customers across India are also serviced through multiple
delivery channels such as Phone Banking, Net Banking, Mobile Banking and SMS
based banking. The Banks expansion plans take into account the need to have a
presence in all major industrial and commercial centres, where its corporate customers
are located, as well as the need to build a strong retail customer base for both deposits
and loan products. Being a clearing / settlement bank to various leading stock
exchanges, the Bank has branches in centres where the NSE / BSE have a strong and
active member base.
As of June 30, 2016, the Bank also has a network of 4,541 branches and 12,013
ATMs across India. Moreover, HDFC Bank's ATM network can be accessed by all
domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and
American Express Credit/Charge cardholders.
62
Management
Mrs. Shyamala Gopinath holds a Masters Degree in Commerce and is a CAIIB. Mrs.
Gopinath has 39 years of experience in financial sector policy formulation in different
capacities at RBI. As Deputy Governor of RBI for seven years and member of the
Board. Mrs. Gopinath had been guiding and influencing the national policies in the
diverse areas of financial sector regulation and supervision, development and
regulation of financial markets, capital account management, management of
government borrowings, forex reserves management and payment and settlement
systems.
The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25
years and before joining HDFC Bank in 1994 was heading Citibank's operations in
Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of
experience in public policy, administration, industry and commercial banking. Senior
executives representing HDFC are also on the Board.
Senior banking professionals with substantial experience in India and abroad head
various businesses and functions and report to the Managing Director. Given the
professional expertise of the management team and the overall focus on recruiting and
retaining the best talent in the industry, the bank believes that its people are a
significant competitive strength.
63
Technology
HDFC Bank operates in a highly automated environment in terms of information
technology and communication systems. All the banks branches have online
connectivity, which enables the bank to offer speedy funds transfer facilities to its
customers. Multi-branch access is also provided to retail customers through the
branch network and Automated Teller Machines (ATMs).
The Bank has made substantial efforts and investments in acquiring the best
technology available internationally, to build the infrastructure for a world class bank.
In terms of core banking software, the Corporate Banking business is supported by
Flexcube, while the Retail Banking business by Finware, both from i-flex Solutions
Ltd. The systems are open, scaleable and web-enabled.
The Bank has prioritised its engagement in technology and the internet as one of its
key goals and has already made significant progress in web-enabling its core
businesses. In each of its businesses, the Bank has succeeded in leveraging its market
position, expertise and technology to create a competitive advantage and build market
share.
64
Business Profile
HDFC Bank caters to a wide range of banking services covering commercial and
investment banking on the wholesale side and transactional / branch banking on the
retail side. The bank has three key business segments:
Wholesale Banking Services
The Bank's target market ranges from large, blue-chip manufacturing companies in
the Indian corporate to small & mid-sized corporates and agro-based businesses. For
these customers, the Bank provides a wide range of commercial and transactional
banking services, including working capital finance, trade services, transactional
services, cash management, etc. The bank is also a leading provider of structured
solutions, which combine cash management services with vendor and distributor
finance for facilitating superior supply chain management for its corporate customers.
Based on its superior product delivery / service levels and strong customer
orientation, the Bank has made significant inroads into the banking consortia of a
number of leading Indian corporates including multinationals, companies from the
domestic business houses and prime public sector companies. It is recognized as a
leading provider of cash management and transactional banking solutions to corporate
customers, mutual funds, stock exchange members and banks.
Retail Banking Services
The objective of the Retail Bank is to provide its target market customers a full range
of financial products and banking services, giving the customer a one-stop window
for all his/her banking requirements. The products are backed by world-class service
and delivered to customers through the growing branch network, as well as through
65
alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile
Banking.
The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank
Plus and the Investment Advisory Services programs have been designed keeping in
mind needs of customers who seek distinct financial solutions, information and advice
on various investment avenues. The Bank also has a wide array of retail loan products
including Auto Loans, Loans against marketable securities, Personal Loans and Loans
for Two-wheelers. It is also a leading provider of Depository Participant (DP) services
for retail customers, providing customers the facility to hold their investments in
electronic form.
HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit card
as well. The Bank launched its credit card business in late 2001. By March 2015, the
bank had a total card base (debit and credit cards) of over 25 million. The Bank is also
one of the leading players in the merchant acquiring business with over 235,000
Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant
establishments. The Bank is well positioned as a leader in various net based B2C
opportunities including a wide range of internet banking services for Fixed Deposits,
Loans, Bill Payments, etc.
Treasury
Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the
liberalization of the financial markets in India, corporates need more sophisticated
risk management information, advice and product structures. These and fine pricing
on various treasury products are provided through the bank's Treasury team.
66
To comply with statutory reserve requirements, the bank is required to hold 25% of its
deposits in government securities. The Treasury business is responsible for managing
the returns and market risk on this investment portfolio.
67
Sweep-In Account:
It is fixed deposit linked to customers saving account. So, even if their savings
account runs a bit short, they can issue a cheque or use their ATM Card. The money is
automatically swept in from their fixed savings account.
Super Saver Account:
It gives an overdraft facility up to 75% of customers Fixed Deposit. In an emergency,
customers can access their funds while their Fixed Deposit continues to earn high
interest.
HDFC Bank Plus:
Apart from Regular and Premium Current accounts Bank also have HDFC Bank plus
and a current account. Customers can transfer up to Rs. 50 lacs per month at no extra
charge, between the four metros. They can also avail of cheque clearing between the
four metros,
Get cash delivery/pickup to Rs 25000/- home delivery of Demand Drafts, at par
cheque, outstation cheque clearance facility, etc.
Demat Account:
Protect their customers shares from damage, loss and theft. The customers can also
access their Demat account on the Internet.
Loans for every need:
Now, Banks loans come to people in easy-to-pay monthly installments, and are
available with easy documentation and quick delivery.
68
Personal loans:
Customers can now take a loan up to 3 lacks for a wedding, education, purchase of a
computer or an exciting holiday.
New car loans and used Car Loans:
The Bank also provides finance up to 90% of the cost of a car, either new or used!
And the loans come to the customers with easy documentation and speedy processing
at attractive interest rates.
Loans against shares:
Now customers are able to get overdraft up to Rs 10 lacks at an attractive interest rate
against physical shares and also up to 50% of the market value of their shares. In case
of Demat shares, they can get a loan against shares of up to 65% of the market value
of their shares, till Rs 20 lacks.
Two Wheeler & Consumer Loans:
Now the Bank helps its customers to buy the best durables for their home.
Mutual Funds:
Apart from a wide choice of mutual funds to suit customers individual needs,
customers benefit from expert advice on choosing the right funds based on in-depth
market analysis.
69
BALANCED FUNDS-
70
DEBT FUNDS
LIQUID FUNDS-
72
SWOT ANALYSIS
SWOT Analysis is a powerful technique for understanding your Strengths and
Weaknesses, and for looking at the Opportunities and Threats you face. Used in a
business context, it helps you carve a sustainable niche in your market. Used in a
personal context, it helps you develop your career in a way that takes best advantage
of your talents, abilities and opportunities.
73
for staff.
OPPORTUNITIES
Profit margins will be good.
Could extend to overseas broadly.
New specialist applications.
Could seek better customer deals.
Fast-track career development opportunities on an industry-wide basis.
An applied research centre to create opportunities for developing techniques to
74
THREATS
Legislation could impact.
Great risk involved
Very high competition prevailing in the industry.
Vulnerable to reactive
KEY POINT
SWOT Analysis is a simple but powerful framework for analyzing company's
Strengths and Weaknesses, and the Opportunities and Threats you face. This helps
you to focus on your strengths, minimize threats, and take the greatest possible
advantage of opportunities available to you.
75
To study the performance indices that can be used for mutual fund
comparison.
76
RESEARCH METHODOLOGY
Research is an organized enquiry designed and carried out to provide information for
solving a problem.
Research methodology is the process used to collect information and data for the
purpose of making business decisions. The methodology may include publication
research, interviews, surveys and other research techniques.
Research Design
A research design serves as a bridge between what has been established (the research
objectives) and how to accomplish these objectives. In fact, the research design is the
conceptual structure within which research is conducted; it constitutes the blueprint
for the collection, measurement and analysis of data. More explicitly, the design
decisions happen to be in respect of:
i) What is the study about?
ii) Why is the study being made?
iii) Where will the study be carried out?
iv) What type of data is required?
v) Where can be the required data found?
vi) What period of time will the study include?
vii) What will be the sample design?
viii) What technique of data collection will be used?
ix) How will the data be analyzed?
x) In what style will the report be prepared?
77
The function of research design is to provide for the collection of relevant evidence
with minimal expenditure of effort, time and money. But how all these can be
achieved depends mainly on the research purpose.
Research Type:
In this report I have used Descriptive research technique.
Descriptive research includes surveys and fact-finding enquiries of different kinds.
The major purpose of descriptive research is description of the state of affairs as it
exists at present. The main characteristic of this method is that the researcher has no
control over the variables.
Data Collection:
The task of data collection begins after a research problem has been defined. While
deciding about the method of data collection to be used for the study, the researcher
should keep in mind two types of data viz, primary and secondary.
PRIMARY DATA may be described as those data that have been observed and
recorded by the researchers for the first time to their knowledge. It is the data which
has been collected through personal contact.
78
SECONDARY DATA is the data which are available in the form of fact and figures.
Websites
Magazines
Articles
TECHNIQUES USED IN THIS STUDY
In this study, we have used various statistics tools like descriptive statistics,
percentage, indices available, etc. for analyzing, interpreting and comparison of
different mutual fund schemes. The Sharpe Index Model is also used to analyze the
performance evaluation and ranking for the difference mutual funds schemes in India.
SCOPE OF THE STUDY:
The 5 most preferred public and private sector mutual funds schemes have been taken
for the study. These public and private mutual funds schemes were studies during the
period of 1st April, 2015 to 31st March, 2016.
LIMITATIONS OF THE STUDY:
Due to shortage of time and money, we selected only 5 mutual funds company which
include public and private mutual funds. The data was collected for analysis from 1
April, 2015 to 1 April, 2016. My study is based on the limited 5 mutual funds
company only which affects the results of the study.
79
The risk-free asset has zero variance in returns (hence is risk-free); it is also
uncorrelated with any other asset (by definition: since its variance is zero).
As a result, when it is combined with any other asset, or portfolio of assets, the
change in return and also in risk is linear.
Month
Yield
Apr-09
3.81
May-09
3.25
Jun-09
3.34
Jul-09
3.22
Aug-09
3.34
Sep-09
3.33
Oct-09
3.23
Nov-09
3.27
Dec-09
3.54
Jan-10
3.85
Feb-10
4.11
Mar-10
4.33
71
219
Gilt Fund
16
Equity Schemes
64
Debt Schemes
106
17
10
Money Market
The Monthly NAV & Returns of above three Mutual Fund Schemes as Follows:1. Birla Sun Life Equity Fund (Growth)
Month
Apr-15
123.90 - 183.76
48.3132
May-15
183.76 - 195.43
6.3507
Jun-15
195.43 - 194.66
-0.394
Jul-15
194.66 - 216.34
11.1374
Aug-15
216.34 - 216.34
Sep-15
216.34 - 231.95
7.2155
Oct-15
231.95 - 223.08
-3.8241
Nov-15
223.08 - 239.77
7.4816
Dec-15
239.77 - 252.08
5.1341
Jan-16
252.08 - 241.77
-4.09
Feb-16
241.77 - 237.14
-1.915
Mar-16
237.14 - 252.91
6.6501
AVERAGE RETURN
6.84%
82
Monthly Return
S t
Rp R f
6.84% 3.55%
13.39
S t 0.235
St
Apr-15
32.0807 - 31.9038
-0.5514
May-15
31.9038 - 32.3045
1.2560
Jun-15
32.3045 - 33.0633
2.3489
Jul-15
33.0633 - 32.8129
-0.7573
Aug-15
32.8129 - 33.0589
0.7497
Sep-15
33.0589 - 33.3736
0.9519
Oct-15
33.3736 - 33.9135
1.6177
Nov-15
33.9135 - 33.7813
-0.3898
Dec-15
33.7813 - 33.8415
0.1782
Jan-16
33.8415 - 33.7849
-0.1673
Feb-16
33.7849 - 33.7849
0.0000
Mar-16
33.7849 - 33.9643
0.5310
AVERAGE RETURN
0.4806 %
83
Monthly Return
S t
Rp R f
0.48% 3.55%
0.942
S t 3.259
St
Apr-15
7.13 - 8.65
21.3184
May-15
8.65 - 10.66
23.2370
Jun-15
10.66 - 10.28
-3.5647
Jul-15
10.28 - 11.44
11.2840
Aug-15
11.44 - 11.44
0.0000
Sep-15
11.44 - 12.19
6.5559
Oct-15
12.19 - 11.42
-6.3167
Nov-15
11.42 - 12.24
7.1804
Dec-15
12.24 - 12.87
5.1471
Jan-16
12.87 - 12.15
-5.5944
Feb-16
12.15 - 12.09
-0.4938
Mar-16
12.09 - 12.85
6.2862
84
Monthly Return
S t
Rp R f
5.4199% 3.55%
9.60
S t 0.1947
St
Average
Sharpe Index
Return
Ratio
6.8383 %
0.235
0.4806 %
-3.259
III
5.4199 %
0.1947
II
85
Rank
Average Return
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Birla Sun Life Equity
Fund-Growth
-1
-1.5
-2
-2.5
-3
-3.5
86
50
119
Equity Schemes
22
Debt Schemes
74
Money Market
Gilt Fund
87
Key Personnel: Mr. Uday S Kotak (Chairman), Mr. Sandesh Kirkire (CEO), Mr.
Alroy Lobo (Chief Strategist & Global Head Equities Asset Mgmts.), Mr. V R
Narasimhan (CCO), Mr. R. Krishnan (COO), Mr. Sandeep Kamath (Compliance),
Mr. R. Chandrasekaran (IRO)
Apr-15
18.755 - 20.77
10.7438
May-15
20.77 - 27.76
33.6543
Jun-15
27.76 - 27.516
-0.8790
Jul-15
27.516 - 30.134
9.5145
Aug-15
30.134 - 30.134
0.0000
Sep-15
30.134 - 32.362
7.3936
Oct-15
32.362 - 31.2190
-3.5319
Nov-15
31.2190 - 33.2560
6.5249
Dec-15
33.2560 - 34.354
3.3017
Jan-16
34.354 - 33.1050
-3.6357
Feb-16
33.1050 - 32.9910
-0.3444
Mar-16
32.9910 - 34.8960
5.7743
AVERAGE RETURN
5.7097%
88
Monthly Return
S t
Rp R f
5.709% 3.55%
10.06
S t 0.2144
St
Apr-15
12.8357 - 13.1026
2.0794
May-15
13.1026 - 13.736
4.8342
Jun-15
13.736 - 13.6629
-0.5249
Jul-15
13.736 - 14.0937
3.1455
Aug-15
14.0937 - 14.0937
0.0000
Sep-15
14.0937 - 14.1651
0.5066
Oct-15
14.1651 - 14.2771
0.7907
Nov-15
14.2771 - 14.5153
1.6684
Dec-15
14.5153 - 14.6471
0.9080
Jan-16
14.6471 - 14.5702
-0.5250
Feb-16
14.5702 - 14.5597
-0.0721
Mar-16
14.5597 - 14.8148
1.7521
AVERAGE RETURN
1.2136%
89
Monthly Return
S t
Rp R f
1.2136% 3.55%
1.59
S t 1.4634
St
Apr-15
9.122 - 9.98
9.4058
May-15
9.98 - 13.789
38.1663
Jun-15
13.789 - 13.447
-2.4802
Jul-15
13.447 - 14.894
10.7608
Aug-15
14.894 - 14.894
0.0000
Sep-15
14.894 - 15.918
6.8753
Oct-15
15.918 - 14.9270
-6.2257
Nov-15
14.9270 - 16.06
7.5903
Dec-15
16.06 - 16.675
3.8294
Jan-16
16.675 - 15.85
-4.9475
Feb-16
15.85 - 15.8110
-0.2461
Mar-16
15.8110 - 17.1080
8.2031
90
Monthly Return
S t
Rp R f
5.911% 3.55%
11.66
S t 0.1637
St
Average
Sharp Index
Return
Ratio
Kotak Equity-FOF-Growth
5.7097 %
0.2144
1.2136 %
- 1.4634
III
5.9110 %
0.1637
II
Growth
91
Rank
Average Return
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Kotak Equity-FOF
-0.5
-1
-1.5
-2
92
13
30
Equity Schemes
13
Debt Schemes
Money Market
Gilt Fund
Apr-15
34.8155 - 36.6330
5.2204
May-15
36.6330 - 56.9001
55.3247
Jun-15
56.9001 - 55.5782
-2.3232
Jul-15
55.5782 - 60.7149
9.2423
Aug-15
60.7149 - 60.7149
0.0000
Sep-15
60.7149 - 63.0134
3.7857
Oct-15
63.0134 - 60.7351
-3.6156
Nov-15
60.7351 - 64.4480
6.1133
Dec-15
64.4480 - 68.3673
6.0813
Jan-16
68.3673 - 65.7441
-3.8369
Feb-16
65.7441 - 64.8682
-1.3323
Mar-16
64.8682 - 70.1250
8.1038
AVERAGE RETURN
6.8970%
94
Monthly Return
S t
Rp R f
6.897% 3.55%
15.252
S t 0.210
St
Apr-15
27.1535 - 28.2081
3.8838
May-15
28.2081 - 27.8613
-1.2294
Jun-15
27.8613 - 28.1730
1.1188
Jul-15
28.1730 - 28.1160
-0.2023
Aug-15
28.1160 - 28.1160
0.0000
Sep-15
28.1160 - 28.3370
0.7860
Oct-15
28.3370 - 28.4620
0.4411
Nov-15
28.4620 - 28.9679
1.7775
Dec-15
28.9679 - 28.9170
-0.1757
Jan-16
28.9170 - 29.0567
0.4831
Feb-16
29.0567 - 29.0088
-0.1649
Mar-16
29.0088 - 29.2065
0.6815
95
Monthly Return
Rp R f
S t
0.6167 3.55%
1.28
S t 2.289
St
Apr-15
25.9839 - 27.2905
5.0285
May-15
27.2905 - 37.1072
35.9711
Jun-15
37.1072 - 38.6629
4.1924
Jul-15
38.6629 - 40.8944
5.7717
Aug-15
40.8944 - 40.8944
0.0000
Sep-15
40.8944 - 42.8570
4.7992
Oct-15
42.8570 - 41.6245
-2.8758
Nov-15
41.6245 - 44.1556
6.0808
Dec-15
44.1556 - 45.8891
3.9259
Jan-16
45.8891 - 44.3687
-3.3132
Feb-16
44.3687 - 42.6067
-3.9713
Mar-16
42.6067 - 45.3606
6.4635
AVERAGE RETURN
5.1727 %
96
Monthly Return
S t
Rp R f
5.1727 3.55%
10.449
S t 0.155
St
Average
Sharp Index
Return
Ratio
6.8970 %
0.210
0.6167 %
-2.289
III
5.1727 %
0.155
II
97
Rank
Average Return
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Average Return
-1
-1.5
-2
-2.5
98
98
317
Equity Schemes
59
Debt Schemes
213
23
Money Market
Gilt Fund
99
Apr-15
72.94 - 79.73
9.3090
May-15
79.73 - 99.72
25.0721
Jun-15
99.72 - 98.41
-1.3137
Jul-15
98.41 - 107.67
9.4096
Aug-15
107.67 - 107.67
0.0000
Sep-15
107.67 - 116.39
8.0988
Oct-1
116.39- 111.17
-4.4849
Nov-15
111.17 - 118.36
6.4676
Dec-15
118.36 - 123.01
3.9287
Jan-16
123.01 - 116.67
-5.1541
Feb-16
116.67 - 116.96
0.2486
Mar-16
116.96 - 125.02
6.8912
AVERAGE RETURN
4.8727%
100
Monthly Return
S t
Rp R f
4.8727% 3.55%
8.189
S t 0.1615
St
Apr-15
27.7341 - 29.4577
6.2147
May-15
29.4577 - 29.0718
-1.3100
Jun-15
29.0718 - 29.4018
1.1351
Jul-15
29.4018 - 29.2732
-0.4374
Aug-15
29.2732 - 29.2732
0.0000
Sep-15
29.2732 - 29.3743
0.3454
Oct-15
29.3743 - 29.5396
0.5627
Nov-15
29.5396 - 30.0600
1.7617
Dec-15
30.0600 - 29.8737
-0.6198
Jan-16
29.8737 - 29.9950
0.4060
Feb-16
29.9950 - 29.7610
-0.7801
Mar-16
29.7610 - 29.9240
0.5477
AVERAGE RETURN
101
Monthly Return
0.6522%
Rp R f
S t
0.6522% 3.55%
1.9472
S t 1.488
St
Apr-15
56.88 - 63.84
12.2363
May-15
63.84 - 85.02
33.1767
Jun-15
85.02 - 85.95
1.0939
Jul-15
85.95 - 100.63
17.0797
Aug-15
100.63 - 100.63
0.0000
Sep-15
100.63 - 107.97
7.2940
Oct-15
107.97 - 106.29
-1.5560
Nov-15
106.29 - 113.55
6.8304
Dec-15
113.55 - 121.69
7.1686
Jan-16
121.69 - 118.88
-2.3091
Feb-16
118.88 - 120.47
1.3375
Mar-16
120.47 - 127.34
5.7027
AVERAGE RETURN
7.3379%
102
Monthly Return
S t
Rp R f
7.3379% 3.55%
9.9567
S t 0.3804
St
Average
Sharpe Index
Rank
Return
Ratio
4.8724 %
0.1615
II
0.6522 %
-1.488
III
7.3379 %
0.3804
(Growth Option)
ICICI Prudential Income Plan(Growth Option)
ICICI Prudential Tax Plan(Growth Option)
103
Average Return
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
ICICI Prudential
Growth Plan-(Growth)
ICICI Prudential
Income Plan(Growth)
-1
-1.5
-2
104
Reliance mutual fund, promoted by the Anil Dhirubhai Ambani (ADAG) group, is
one of the fastest growing mutual funds in India having doubled its assets over the last
one year. In March, 2006, the Reliance mutual fund emerged as the largest private
sector fund house in the country, overtaking Prudential ICICI which has been holding
that position for many years.
The sponsor of the fund is Reliance Capital Limited, the financial services arm of
ADAG. Reliance Capital Asset Management Limited, a wholly owned subsidiary of
Reliance Capital Limited, acts as the AMC to the fund. Directors of the company
include Amitabh Jhunjhunwala, a senior executive of ADAG.
No. of schemes
57
185
Equity Schemes
60
Debt Schemes
100
15
Money Market
Gilt Fund
Apr-15
9.2882 - 10.0227
7.9079
May-15
10.0227 - 13.0391
30.0957
Jun-15
13.0391 - 12.9842
-0.4210
Jul-15
12.9842 - 14.0367
8.1060
Aug-15
14.0367 - 14.0367
0.0000
Sep-15
14.0367 - 14.9553
6.5443
Oct-15
14.9553 - 14.0006
-6.3837
Nov-15
14.0006- 14.7205
5.1419
Dec-15
14.7205 - 15.1637
3.0108
Jan-16
15.1637 - 14.5187
-4.2536
Feb-16
14.5187 - 14.4188
-0.6881
Mar-16
14.4188 - 14.8268
2.8296
AVERAGE RETURN
4.3241
106
Monthly Return
Rp R f
S t
4.3241% 3.55%
9.3198
S t 0.0831
St
Apr-15
29.0575 - 30.4693
4.8586
May-15
30.4693 - 29.9680
-1.6453
Jun-15
29.9680 - 30.0525
0.2820
Jul-15
30.0525 - 29.9510
-0.3377
Aug-15
29.9510 - 29.9510
0.0000
Sep-15
29.9510 - 30.0241
0.2434
Oct-15
30.0241 - 30.2366
0.7084
Nov-15
30.2366 - 30.6048
1.2177
Dec-15
30.6048 - 30.5788
-0.0850
Jan-16
30.5788 - 30.7195
0.4601
Feb-16
30.7195 - 30.6491
-0.2292
Mar-16
30.7195 - 30.8515
0.6604
AVERAGE RETURN
0.5111%
107
Monthly Return
S t
Rp R f
0.5111% 3.55%
1.54
S t 1.9719
St
Apr-15
9.714 - 10.7404
10.5662
May-15
10.7404 - 14.0519
30.8322
Jun-15
14.0519 - 14.1409
0.6334
Jul-15
14.1409 - 15.4560
9.3000
Aug-15
15.4560 - 15.4560
0.0000
Sep-15
15.4560 - 16.5706
7.2114
Oct-15
16.5706 - 15.9138
-3.9636
Nov-15
15.9138 - 16.9834
6.7212
Dec-15
16.9834 - 18.2047
7.1911
Jan-16
18.2047 - 17.6641
-2.9696
Feb-16
17.6641 - 17.6091
-0.3114
Mar-16
17.6091 - 18.7234
6.3280
AVERAGE RETURN
5.9616%
108
Monthly Return
S t
Rp R f
5.9616% 3.55%
9.22
S t 0.2613
St
Average Return
Sharp Index
Rank
Ratio
Reliance Equity Fund-
4.3241 %
0.0831
II
0.5111 %
-1.9719
III
5.9666 %
0.2613
Growth Plan-(Growth
Option)
Reliance Income Fund-Retail
Plan - Growth Plan - Growth
Reliance Tax Saver (ELSS)
Fund-Growth Plan- (Growth
Option)
109
Average Return
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Reliance Equity Fund- Reliance Income Fund- Reliance Tax Saver (ELSS)
Growth Plan-(Growth Retail Plan - Growth Plan
Fund-Growth PlanOption)
- Growth
(Growth Option)
-1.5
-2
-2.5
110
Reliance Tax
Saver (ELSS)
Fund-Growth
Plan- (Growth
Option)
FINDINGS
As far as analysis is concerned, HDFC Growth fund was among the best
performers fund. Although all the funds are affected by the global meltdown,
(recession) still HDFC Growth Fund has better performed comparing to other
funds for its systematic and unsystematic risk. It offers advantages of
diversification, market timing, and selectivity. In the comparison of sample of
funds, HDFC Growth Fund is found highly diversified fund and because of high
diversification, it has reduced the total risk of portfolio.
Further, other funds were found very poor in diversification, market timing, and
selectivity. Although HDFC Top 200 Fund and Equity Fund performed better in
terms of returns but these suffered by the systematic (market volatility) and lack
of diversification.
One of the findings that I came across is that generally, a good model of asset
class is the one that can explain a large portion of the variance of returns on the
assets and there were some stocks in the fund portfolio, which were not aligned
with strategy of the fund portfolio.
The optimal situation involves the selection that proceeds from sensible
basis of expected risk and returns and these expectations can be satisfied by
having right mix of assets.
111
SUGGESTIONS/RECOMMENDATIONS
In regards to its Mutual funds of the Bank should be profitable for the
investors.
The Bank should also put emphasis on its Competitors mutual funds
industries.
The Bank should try to generate internal funds while calculating proprietary
ratio.
The Bank should review its investments in current assets and long term assets.
The Bank should have optimum capital mix so that the cost of capital should
be decreased.
The company should advertise their tax saving plan more so that they can gain
more customers.
HDFC must try to locate hard working distributors who are providing good
business in their respective geographical area.
AMCs should go for increasing more awareness about different facilities of
investment such as SIP & STP among investors.
112
CONCLUSION
8.00%
7.00%
7.34%
6.84%
6.00%
6.90%
5.91%
5.71%
5.42%
4.87%
5.00%
5.96%
5.17%
4.32%
4.00%
3.00%
2.00%
1.21%
1.00%
0.65%
0.62%
0.51%
0.48%
0.00%
Equity Fund (Growth)
Mutual fund industry is on growth now days. People are becoming more interested in
purchasing mutual funds because they find it less risky and more beneficial compared
to direct equity investment.
In this project, comparison has been done on the basis of technical ratios which depict
risk- return relationship and by analyzing past years returns of the funds..
HDFC Equity Fund had performed above average and given consistent returns year
over year.
Numbers of foreign AMCs are in the queue to enter the Indian markets. We have
approximately 29 mutual funds which is much less than US. There is a big scope for
expansion. Mutual fund can penetrate rural like the Indian insurance industry with
simple and limited products.
113
LIMITATIONS
Summer training program was only 8 weeks, so it was not possible to make
full study on the topic.
Bank doesnt provide full information about bank as that could violate data
protection Act.
114
BIBLIOGRAPHY
1. Books on mutual fund- AMFI publications, Investment Analysis and
Portfolio Management by Prasanna Chandra.
2. Financial Management- 11th Edition by I M Pandey.
3. Journals- ICFAI Publications- Overview on Mutual Funds.
4. Newspapers- The Economic Times, Business Standard.
5. Internet sites
a) www.Google.com
b) www.mutualfundsindia.com
c) www.investopedia.com
d) www.wikipedia.com
e) www.answers.com
f)
www.nribanks.com
g) www.mutualfunds.about.com/cs/history/a/fundhistory.html
h) www.kotakmutual.com
i)
www.mutualfund.birlasunlife.com
j) www.reliancemutual.com
6. Mutual fund insight magazine
115
116