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COLLATION OF ARTICLES

Collection of Select Research Articles, News Clips and Abstracts

Disclaimer

All the articles contained herein have been collated by D&B from sources believed by it to be accurate and

reliable. Although reasonable care has been taken to ensure that the information reproduced herein is true,

such information is provided ‘as is’ without any warranty of any kind and D&B, in particular, makes no

representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such

information. All information contained herein must be construed solely as statements of opinion of the

respective authors / publishers / copyright owners and D&B shall not be liable for any loss incurred by the

users from any use of this reading material or its contents.

Note This material is a collection of select articles from journals / publications relating to financial markets. Due

credit has been given to the respective publishers / authors / copyright owners. These articles reproduced

herein are intended to provide a reading support to the participants of the Conference.

Distribution of Financial Products D&B Fund Management Series 2006

1

Index

Section I: Select Articles on Distribution of Financial Products 1. New Realities of Marketing of Financial Services

2. Multi-distribution switching channels

3. Banking in Cyberspace

4. Exchange traded Fund: A new Investment Option for taxable investor

5. Tax efficient investment portfolios within a framework of strategic asset

allocation

6. Are Banks making in the fund business

7. For banks, does pull work better than push?

8. The quest to outperform

9. Are hybrid sales teams the answer?

10. To load or not to Load?

11. Pension Planning

12. The impact of regulatory change on retail financial product distribution in UK

Section ll: New Clips (Source: Prowess, CMIE) 1. Chola Mutual Bets on Region-Specific Approach

2. IDBI Capital Market Plans Retail Broking

3. Peerless, ICICI Plan Co-Branded Card

4. Mastek launches its globally successful Elixir policy administration solution

5. Banks Tying Up With Insurance Firms, Mfs

6. Deutsche in Retail India Foray

7. Allbank to sell PNB mutual fund products

8. Principal Mutual, Allahabad Bank May Join Hands

9. Mahindra Finance Ties Up With HPCL

10. UCO bank in pact with prudential ICICI to sell mf products

11. Peerless To Expand Products Basket

12. UTI Enters Distribution Tie-Up With Dena Bank

13. Prudential ICICI banks on UCO for marketing mf products

14. IOB, Chola mf in distribution pact

15. PNB, Indian Overseas Bank Sign Mou

16. Sundaram to Expand In Middle East 17. PNB Set To Enter Life Insurance


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18. ITGI Ties Up With Mumbai Bank, Will Sell Its Products

19. Reliance Cap in Retail Foray

20. Yes Bank, SIDBI Announce Alliance

21. Il&Fs Invest smart Plans Insurance Broking

22. Private Insurers Reach Out To Rural Customers

23. Sundaram mutual signs distribution pact with IOB

24. Jm Financial -- Retail Foray Ticks Up Interest

25. Vijaya Bank Vends Principal Group’s Mf Products

Section lll: Abstracts of research articles 1. How to market to financial services

2. Integrated product distribution: Crossing the lines

3. The impact of information technology on customer and supplier relationships in the

financial services

4. The value of muti-channel distribution systems in the financial services sector

5. Strategies for Buying and Selling Mutual Funds

6. The delivery of investment choice

7. From service to product

8. Banks urged to form post office links


3

Section II: News Clips (Prowess, CMIE) Chola Mutual Bets on Region-Specific Approach Cholamandalam's proposed strategic alliance with the DBS Bank of Singapore is also

expected to help expansion plans. After a slew of new fund offers that have rounded off its

product portfolio, Chola Mutual Fund now plans to focus on selling its established funds to

new investors. ""We would like to focus on marketing vanilla products such as Chola

Growth Fund and Chola Mid-cap to retail investors,"" says Mr Sashi Krishnan, Chief

Executive of Chola Asset Management Company. To achieve this, Chola Mutual Fund is

segmenting the market regionally, with different distribution strategies for each market.

""There can no longer be one single strategy for all regions and investors. Segmentation

has to happen. Retail and high net worth investors also require different types of

distribution and products,"" says Mr Krishnan.

In the South, where the fund feels the market is under-penetrated, it is forging new

alliances with public sector banks such as Indian Overseas Bank to reach out to investors

in the interior towns. ""We've found a strong equity cult in places like Karaikudi and people

have developed an appetite for equity funds"". In the East, the fund is working through

franchisee arrangements. It appoints franchisees, who in turn enroll individual agents to

market Chola's products. In the North and the West, where awareness about mutual fund

products is higher, Mr Krishnan feels that the fund can piggyback on well-established

mutual fund distribution chains such as Bajaj Capital and RR Capital Services.

The fund also has plans to clearly target its different products at different types of

investors. Vanilla funds such as the large-cap fund Chola Growth Fund and the Chola Mid-

cap Fund will be targeted at retail investors; because the fund believes these investors

need uncomplicated products. These investors are encouraged to take systematic

investment plans, rather than invest in one go.


4

According to him, high net worth investors already have a view on their portfolio and need

a financial advisor only to help them out with products that can add returns or help them

diversify. ""Funds such as Chola Opportunities and Global Advantage are targeted at such

investors,"" explains Mr Krishnan. Cholamandalam's proposed strategic alliance with the

DBS Bank of Singapore is also expected to help expansion plans for the mutual fund.

""With their strong presence in the emerging markets, we can look to explore new cross

border opportunities,"" says Mr Krishnan. He expects that the alliance will help the fund

house raise money from investors in emerging markets, to be channeled into India. The

alliance, once formalized, is also expected to help the fund house in structuring new

products.

Source: HBL (inet) - Date: 2005.08.20

IDBI Capital Market Plans Retail Broking IDBI Capital Market Services Ltd (ICMS), which mainly caters to institutional clients, is set

to enter into retail broking services in a concerted manner. The company, a subsidiary of

IDBI, has zeroed in on retail services as part of its overall growth plans, Mr V.P. Shetty,

Chairman of IDBI, said, adding that the retail segment is expected to provide it with

adequate growth opportunities in the coming days.

The past fiscal, given the market dynamics, had posed big challenges for ICMS. These

originated largely because of developments taking place in the Government securities

arena. ICMS is a major player in the G-secs market in its capacity as a primary dealer

(PD). ICMS, a member of both the NSE and the BSE, currently claims to present ""quality

trade execution"" to institutional clients. It is now setting up a portal, which will enable it to

effectively diversify into the retail space, said Mr O.V. Bundellu, Chairman of ICMS. The

portal is being tested before a formal launch takes place, he added.

The PD business seems to be turning for the better, Mr Bundellu, who is also an ED of

IDBI, mentioned, adding that certain changes in investment habits of individuals - such as

allocation to g-secs by retail clients - should also benefit the company in the long run. As is

well known, retail participation in this market is negligible at the moment. The company will

continue to offer multiple services, including client asset management and distribution of

financial products. ICMS will also step up efforts to act as an arranger in the private

placement market for wholesale debt. It currently manages a substantial amount for

various provident and pension funds.



5

Peerless, ICICI Plan Co-Branded Card The Peerless General Finance & Investment Company (PGFIC), one of the largest non

banking finance company in India, is foraying into credit card business. PGFIC would be

the first NBFC in the country to launch a credit card, which would be co-branded with ICICI

Bank. The managing director of Peerless, S K Roy, said the company's vision was to

emerge as the country's largest financial super market for retail distribution of all kind of

financial products.

He said Peerless was hoping to mobilise Rs 1,300 crore deposit in 2005-06 compared to

Rs 1, 200 crore last year. The general manager (marketing) of PGFIC, M Mallick, said

Peerless would be launching a co- branded credit card with the largest private sector bank

in India, ICICI Bank. ""The launch of the co-branded credit card will be in mid-January

2006,"" he said. The company, which is approaching its 75th anniversary, is giving a

special thrust on fee-based income by utilizing its 100,000 strong agent force.

Mallick was talking to reporters at the sidelines of the launch of new logo of PGFIC for the

celebration of platinum jubilee. The company had tied up with LIC for distribution of life

insurance products. It recently tied up with National Insurance Company for distribution of

non-life insurance products.

""We are looking at Rs 10 crore fee-based income in 2004-05, the first full-year after the

company ventured into this field,"" GM marketing said. Mallick pointed out that the NBFC

was targeting sale of 10,000 credit card per month. ""This is not an ambitious target -

Peerless has 170 branches all over the country and if even 100 branches contribute, the

figure is achievable,"" he said. Mallick said ICICI Bank would give special training to some

agents of PGFIC for selling credit cards.

Source: BS (inet) - Date: 2005.12.31


6

Mastek launches its globally successful Elixir policy administration solution

Mastek Ltd has announced that the Company now launched its world-class policy

administration platform, Elixir, for the first time in India. It is a perfect fit for Insurance

Companies who want to launch innovative hybrid products in a shortest time, improve

efficiency of their distribution network and enhance competitiveness. Elixir is a component-

based solution that has been designed specifically for insurance Companies. It offers an

alternative to existing legacy product solutions and broader, horizontal offerings that

require extensive customisation. Elixir has already been successfully installed in 50

locations worldwide. Customers have reported significant improvements in operational and

distribution efficiency, and a considerable reduction in the time-to-market of new products.

Says Ashank Desai, Company's Chairman, "The insurance market in India is an exciting

one for Mastek. Incomes are rising among the Indian middle class and there's increasing

demand for innovative and customized life insurance products. As a company with a

thriving insurance vertical with good insurance domain and business solutions experience,

we are confident that our IT solutions can add significant business value for Indian

insurance Companies and help them stay competitive.” Elixir is an end-to-end policy

administration platform that seamlessly integrates the front office with the back office. It

also has a library of plug-and-play components that can be flexibly combined to create

unique, customer-specific solutions. Elixir components are designed to jumpstart the

adoption of technology and reduce application development time by up to 40%.Mr. Vijay

Chavan, Worldwide head of Insurance and Financial Services vertical, of the Company

says, "In our experience with insurance customers around the world, we have realized that

what they really need are business-agile systems that can help them launch new products

quickly, grow and manage their channel partners more efficiently and deliver better

customer service. Elixir has been designed keeping these needs in mind."In India, Max

Mew York Life has been using Elixir components for the last 20 months to enhance the

service and satisfaction levels of their distribution force. Birla Sun Life after a detailed

evaluation has decided to choose Elixir Components for Improving their efficiency.


7

Elixir's library of components includes: - Product Architect

- New Business / Underwriting

- Point-of-Sale

- Channel Management

- Policy Servicing

- Claims Processing

- Reinsurance

- Finance

Each Elixir component can be deployed on its own or as part of a complete end-to-end

solution. The Company also offers a range of implementation and maintenance services

aimed at minimizing cycle deployment, and delivering immediate impact to insurance

customers around the world.

Source: BSE - Date: 2005.12.20


8

Banks Tying Up With Insurance Firms, MF

As a matter of financial convergence, more banks are tying up with insurance companies

and mutual funds (MFs), to be a one stop window for the financial products. Prudential

ICICI Life Insurance has joined hands with Bank of India (BoI) to provide life insurance

cover on the banks home loans. The banks star customers availing home loans will also

be provided a life insurance cover to protect the loan.

Dena Bank has tied-up with LIC Mutual Fund (LICMF) for distribution of the latters MF

schemes through the banks designated branches across the country. While, the

arrangement will boost Dena Banks business prospects in distributing third party products,

it will also help LICMF to further augment its distribution capabilities by increasing retail

presence across the country.

For the home loan borrower of BoI, the insurance will also cover the outstanding loan

amount thereby avoiding any loan burden on the family in case of any casualty. The

insurance product also comes with additional features such as low premium rates, loans

available for insurance premium, higher non-medical limit, etc.

Source: FE (inet) - Date: 2005.12.01

Deutsche in Retail India Foray

This is the first time that the German bank has moved outside Europe. Deutsche Bank on

18th October launched retail banking services in India, the first country outside Europe

where the German banking major will have a retail presence.

It will set up branches in Mumbai, New Delhi, Chennai, Kolkata, Bangalore, Noida and

Gurgaon to tap the growing retail business potential. Indian banks, particularly the private

ones, are riding high on the retail business. ICICI Bank and HDFC Bank have witnessed

over 70 per cent year-on-year growth in retail loan assets in the second quarter of 2005-

06.


9

Deutsche Bank has Rs 10,000 crore of wholesale banking assets in India and infused Rs

419 crore of capital to support its growth in the country. Its total capital deployed in India is

Rs 1,250 crore. The bank will look at India’s upmarket clientele, with the threshold at Rs 5

lakh and Rs 20 lakh for relationship management.

India is one of the most exciting growth markets today due to the increasing number of its

affluent people and we are looking at expanding our presence here, subject to regulatory

approvals, said Rainer Nose, member, group executive committee, Deutsche Bank. The

first retail asset product to be launched by the bank would be home loans, its managing

director and head of retail banking Ajay Bimbhet said. It is not looking at the credit card

segment at the moment.

Deutsche Banks Managing Director and CEO, India, Gunit Chadha said, having a strong

presence in investment banking and custodian services, retail was the only missing bit.

With the Indian market witnessing a growth of 30-40 per cent in retail businesses annually,

we are open to additional capital infusion into our retail operations here, if required.

The bank has set up a holding company with a capital of $50 million for its non-bank

entities in India. The holding company, called Deutche India Holding Private Ltd, will own

Deutsches Asset Management Company, equity broking arm, primary dealership for

government securities, its private wealth management firm and a BPO division. Any

subsidiary floated by the German bank in future will be under the holding company.

It has recruited 400 people for its retail operations and the core offering will consist of

financial planning and advisory services. The bank plans to roll out a comprehensive

product and service offering, ranging from current to savings accounts to investment

products and loans.

Deutsche Bank has tied up with 14 asset management companies for selling mutual funds

and with two vendors for portfolio management services. It has also tied up with Birla Sun

Life Insurance and Bajaj Allianz General Insurance. For ATM facilities, the bank has

signed up ATM services provider Euronet for domestic transactions and also with five

global players, including Bank of America and BNP Paribas, for international payments.


10

The group signed a partnership deal yesterday, finalizing the purchase of a 14 per cent

stake in Chinas Hua Xia Bank. This agreement is aimed at facilitating co-operation

between the two in distribution of credit cards, investment products and cash management

services, and assistance pertaining to retail and corporate banking.


Allbank to sell PNB mutual fund products Allahabad Bank expects to garner Rs 225 crore as fee-based income by distributing

insurance and mutual fund products. The bank today entered into an agreement with

Principal PNB Asset Management Company for distribution of mutual fund products

through its branches across the country. Initially, 600 branches will sell the mutual fund

products of the AMC.

Allahabad Bank chairman and managing director O.N. Singh said the bank has formed a

pact as it was aiming to increase its fee-based income substantially. The fee-based

income of the bank in the last financial year was Rs 100 crore. With the trading profit going

down this year, the tie-up will help the bank to meet the gap.

Sanjay Sachdeva, CEO and managing director of Principal PNB AMC, said the tie-up will

help the company tap retail investors of the country. "The tie-up will offer customers of

Allahabad Bank mutual fund products catering to various genre and financial

requirements," he said.

Principal PNB, a joint venture between Punjab National Bank, the Principal Financial

Group of USA, and Vijaya bank, has assets under management worth Rs 7,700 crore. The

AMC aims to cross the Rs 10,000-crore-mark by March 2006. "We expect to add another

Rs 2,000 crore under equity in the current fiscal. We are aiming a 50 per cent growth in

the second half of this fiscal," added Sachdeva.

Source: TELEGRAPH - Date: 2005.10.19


11

Principal Mutual, Allahabad Bank May Join Hands Principal Mutual Fund plans to tie up with Allahabad Bank for distribution. The two parties

will shortly make an announcement, sources said, adding that the bank plans to offer all

schemes managed by the fund house. Initially, this will be done through select branches.

The proposal is part of Principal MF's strategy to access the bank's network and cater to

new investors, especially those on the retail side. Allahabad Bank, which has a similar tie-

up with UTI Mutual Fund, intends to provide a wide range of financial products to

customers.

It will also try to bolster its own marketing skills to vend such products to retail clients and,

as a consequence, increase its fee-based income. Principal MF has a number of funds in

its table, including several equity funds with different investment objectives. It has recently

worked out a scheme primarily aimed at investing in very large-cap companies.

Principal relocates debt specialist: Mr. Binay Chandgothia, who handled fixed income at

Principal MF's India operations, has moved to Hong Kong. Principal Hong Kong, known as

a retirement service provider, comprises Principal Insurance Company (Hong Kong) Ltd,

Principal Trust Company (Asia) Ltd, Principal Asset Management Company (Asia) Ltd and

Principal Global Investors (Asia) Ltd. It also offers wealth management services.


Mahindra Finance Ties Up With HPCL

Mahindra & Mahindra Financial Services Ltd (Mahindra Finance) and HPCL today

announced a tie-up whereby the finance company would get access to HPCL's rural

distribution network to sell value-added financial products. The tie-up is expected to offer

many strategic opportunities to both companies. Benefits to HPCL include credit being

extended to its customers and better utilization of space at its outlets through Mahindra

Finance opening branch offices.


12

""It will also lead to an increase in customer traffic at HPCL outlets and result in additional

sale of petrol, diesel and other oil products at these outlets,"" an official statement said. Mr

Ramesh Iyer, Managing Director, Mahindra Finance, and Mr Tejbir Singh Sawhney,

Deputy General Manager (Highway Retailing), HPCL, signed the agreement in the

presence of Mr Bharat Doshi, Executive Director, Mahindra & Mahindra Ltd (M&M), and

Mr S.P. Chaudhry, Executive Director (Retail), HPCL.

To start at 'Hamara Pumps': Mr Iyer told newspersons that Mahindra Finance would start

its operations under the tie-up at HPCL's 'Hamara Pumps' in the rural areas of

Maharashtra and Gujarat. Within a month the company hopes to have a presence at all

such outlets nationwide.

Outlet expansion: HPCL currently has 460 low-cost rural retail outlets fashioned as

composite units offering fuel and inputs for farmers. It plans to quickly add another 500

outlets, taking the total to nearly 1,000. Mr Chaudhry said that the chosen retail model was

attractive with break-even happening at monthly fuel sales of 30 kilolitres. Most of these

outlets average 80 kilolitres. HPCL plans to relax the minimum required sales to 50

kilolitres. Mr Doshi said that the tie-up was a result of pursuing schemes of co-location so

that the farmer gets whatever he wants at one location. ""This is adding finance to fuel and

fuel to finance.""



13

UCO bank in pact with prudential ICICI to sell mf products

The UCO Bank has tied up with the Prudential ICICI Asset Management Company for the

distribution of its schemes, including mutual funds, among its 9-million plus customers

through its branches spread across the country. Announcing this here Monday, bank

chairman & managing director V Sridar said UCO has entered into mutual fund (MF)

business last year with the distribution of MFs of LM Asset Management through a few

branches. Mr Sridhar expects that the turnover of MF business would reach Rs 500 crore

at the end of the current year following the inclusion of new products of Prudential ICICI.

The bank has set a target to earn Rs 50 crore by selling MF products. Mr Sridhar said

UCO is already in the business of selling the LIC policies. It is ranked second after the

Corporation Bank which is LIC's strategic bank. According to Mr Sridhar, UCO has about

2,100 branches across India. It has a plan to make all the branches equipped to offer such

non-banking financial investment-related services.

Initially, about 100 branches would start offering the services by March, 2006. Later, every

branch would offer all kinds of banking services and investment related products like MFs,

bond, insurance schemes etc.

Pankaj Razdan, managing director of Prudential ICICI AMC, said they have already tied

up with 16 other private sector banks and financial institutions to distribute their products.

It has tied up with a public sector bank for the first time. Prudential has plans to go in for

partnership agreements with other public sector banks in the near future. UCO Bank's

executive director BK Dutta said this investment-based business will help UCO to utilise

surplus staff properly and also help earn fee-based income.

Source: FE (KOL) - Date: 2005.09.13 Peerless To Expand Products Basket

The Peerless General Finance & Investment Company is set to embark on the business of

distribution of different kinds of financial products for other institutions and agencies.

Addressing the company's annual general meeting, S K Roy, managing director, The

Peerless General Finance & Investment Company said the company planned to explore

new avenues of emerging business opportunities like distribution of various financial

products including life and general insurance products.


14

Peerless would leverage its track record, brand equity, access to rural market,

infrastructure and agent network, skill of the employees, field force and professional

management, for the new initiatives. The company had already made a foray in the

insurance business as a corporate agent of Life Insurance Corporation of India and

National Insurance Company, marketing life insurance and general insurance products.

D N Ghosh, chairman of Peerless, said the company had steadily maintained a

remarkably high growth rate of collection, which increased by about 11 per cent over the

previous year. The company's total collection, during the financial year, stood at Rs

1,112.9 crore. Net profit stood at Rs 65.4 crore.

The company's net owned fund was at Rs 439.8 crore compared to Rs 381.9 crore in the

previous year. Ghosh said, capital adequacy ratio had steeply increased from 23.40 per

cent in 2003-04 to 77 per cent in 2004-05.

Plans for subsidiaries and associated companies had also been chalked out. Bengal

Peerless Housing Development Company planned to set up a multi-utility infrastructure

project ""Axis"" at New Town, Rajarhat. Peerless Securities proposed to take up Bombay

Stock Exchange (BSE) and Central Depository Services Ltd (CDSL) membership, as well

as introduce e-broking services, in the near future. Peerless Hotels would add a new wing,

next to Peerless Inn, which would be four-storied building with 40 rooms. Peerless

Hospitex Hospital & Research Center was looking for opportunities in the areas of

oncology and up gradation of ophthalmology, neurosciences and dialysis.



15

UTI Enters Distribution Tie-Up with Dena Bank

Indias leading Mutual Fund Company UTI Mutual Fund has entered into a distribution tie-

up with Dena Bank under which Dena Bank will offer the entire bouquet of UTI MFs

products across its select branches in India. UTI MF will be offering its schemes initially

through 80 branches of Dena Bank including 41 Fin Mart branches across India.

Dr R H Patil, chairman, UTI MF said, ""This initiative reflects our strategy to rapidly expand

in the retail market and value-add its access network to complement the mutual funds

growth strategy in the Indian mutual fund sector. With this tie-up millions of customers of

Dena Bank will get an opportunity to invest in various schemes of UTI MF closer to their

doorstep at the branches where they do their banking transactions. Dena Bank has got a

dominant presence in Gujarat and Maharashtra which happen to be important retail

markets for UTI MF.""

Dena Bank has a network of over 1100 branches and satellite offices across the country

and enjoys a total volume of business of nearly Rs 32,000 crores. Reflecting upon the

latest initiative Dena Banks chairman Mr M V Nair said, ""In a rapidly changing scenario,

the lender-borrower relationship which banks traditionally had with customers is giving

way to a different kind of business relationship and the banks are now offering a variety of

financial services to the customers to meet their changing aspirations. This tie up is a step

towards converting the bank branch into a financial supermarket which caters to all the

financial needs of the customer.

Source: ASNAG (inet) - Date: 2005.09.13


16

Prudential ICICI banks on UCO for marketing MFoducts

Prudential ICICI AMC Ltd has entered into an agreement with UCO Bank for promotion,

marketing and distribution of its mutual fund schemes, said Prudential ICICI AMC

managing director Pankaj Razdan and chairman-cum-managing director of UCO Bank, V

Sridhar, in a joint announcement made at a press conference on 12 Ocotber 2005.

According to the agreement, UCO would distribute 22 products of Prudential ICICI AMC

through its over 1,700 branches across the country, Razdan said.

"This is part of or objective to increase our retail presence and we would be able to reach

out to a larger base of retail investors across the country," he added and pointed out that

the agreement with UCO Bank would be the asset management company's first tie-up

ever with a public sector bank.

Sridhar said: "We already have 500 counters retailing financial products from our two

earlier tie-ups with UTI Asset Management and Reliance Capital. The Prudential ICICI

AMC products would be distributed through 100 of these outlets. We foresee a turnover of

around Rs 500 crore from mutual fund distribution. We also see an increase of around Rs

50 crore in our fee-based income."

Razdan said Prudential ICICI AMC would receive support from UCO to establish the 22

products as brands and also to market them. "UCO is the most preferred bank in eastern

India and we will have access to its huge customer base," he said. He also said besides

the 22 products, there would be two more products soon." One of the products would be

from the BPO sector, looking at the large part of revenue that comes from outsourcing,"

Razdan commented.

Sridhar said that as part of the agreement, Prudential ICICI AMC would also provide

training to the bank staff to be involved in promoting and marketing the products. "We

would provide customer-fronting officers of the bank in the distribution business with

extensive training to hone their skills in distributing mutual fund products. We would also

provide with valuable information on a continuous basis so that these executives would be

able to educate their customers on sensible investments in mutual funds," Razdan

explained.


17

Sridhar said the tie-up would help UCO Bank to provide its clients a wider range of

products. "We want to cater to the diverse financial needs of our clients. Our aim is to

provide our customers with a bouquet of financial products to choose from," he stated.

Source: HT (KOL) - Date: 2005.09.13

IOB, Chola MF in distribution pact Indian Overseas Bank (IOB) has tied up with Chloe Mutual Fund to distribute the latter’s

schemes through selected branches of the bank, reports Our Chennai Bureau. Sashi

Krishnan, chief executive of Chola MF, said: "The banking channel today is the largest

distribution channel for financial and mutual fund products. Our priority is to reach out to

the retail investors and make available to them both debt and equity products." IOB

chairman & managing director TS Narayanasami said the tie-up will help the bank

increase its fee-based income.

Source: ET - Date: 2005.08.25

PNB, Indian Overseas Bank Sign MoU

The Indian Overseas Bank, or IOB, and principal PNB Asset Management Company on

11 Aug 2005 signed a memorandum of understanding, or MoU, for the distribution of

mutual fund products of Principal AMC.

Under this agreement, IOB will distribute the mutual funds products through its select

branches and staff exclusively trained for this purpose. This initiative is in pursuance of the

banks twin objective working towards providing quality financial solutions and to enhance

the fee-based income for the bank. The bank already has an arrangement with Sundaram

Mutual Fund for sale of its products.

This synergy is expected to be beneficial to both the entities. The existing infrastructure

and staff at IOBs branches could be utilized for marketing this product and increase the

banks profitability. The bank expects to enlarge its customer base by this arrangement

and enhance its business growth. Mr T.S. Narayanasami, chairman and managing

director, Indian Overseas Bank, stated that the bank aims to provide complete financial

solutions to its customer and this initiative is a major step in this direction. The trust the Distribution of Financial Products

D&B Fund Management Series 2006

18

bank enjoys with its customers over six decades and its advancement in technology will

be leveraged into generating fund-based income by sale of various products.


Sundaram to Expand In Middle East Sundaram Mutual Fund is in the process of expanding its distribution network in the

Middle East as it foresees huge growth potential in the region. The NRIs in the Middle

East were offering ""huge potential"" and Sundaram MF is presently in discussion with

banks and financial institutions in the Middle East to expand its distribution network,

Managing Director of Sundaram Asset Management Company, T P Raman told the media

here.

""There is huge potential awaiting to invest in India. NRIs suddenly looking at their own

country as a market providing stable returns. We are seriously thinking of putting a person

in Dubai,"" he said. Presently, Dubai-based Barjeel Securities distributes Sundaram MF

products in Dubai, Abu Dhabi and nearby locations.

After strengthening its distribution network in the Middle East, the company is expected to

open an office in Dubai to monitor the operations. The NRI segment contributes about

Rs.22 crore to the company's assets under management (AUM), said Raman. Sundaram

Asset Management, a wholly-owned subsidiary of Sundaram Finance, now has an AUM of

over Rs 20 billion and maintains over 50 per cent of its AUM on the equity side.

Source: ET (inet) - Date: 2005.08.10


19

PNB Set To Enter Life Insurance At a time when a section of the existing life insurance players prepare to exit from the

intensely competitive market, new and strong players are warming up to take on the

challenge. Among the first of the new set of entrants could well be Punjab National Bank

(PNB).The RBI has given its go-ahead for the bank's proposed foray into the life insurance

business. The new company would aim to be a niche player with a predominant focus on

the group life insurance segment.

The life venture would be floated jointly with the Principal Financial Group, US, and

Bangalore-based Vijaya Bank. There is also a possibility that Berger Paints might

participate in the equity of the life insurance company that is to be christened Principal

PNB Life Insurance Co. Confirming the development, Mr Ranjan Dhawan, General

Manager, PNB, said that the new company would soon be moving the Insurance

Regulatory and Development Authority (IRDA) for the final approvals before taking a

plunge into the market.

""We have just received RBI's approval to participate in the venture. Our plans are to

commence operations within this year after we acquire the IRDA's regulatory approval,""

Mr Dhawan told Business Line. The life company is expected to commence business with

a paid up capital of Rs 110 crore, a shade above the minimum capital requirement of Rs

100 crore. PNB would be holding 30 per cent equity in the company (the maximum

permitted for bank entering insurance) while the remaining shareholding would be split

between Principal Financial, Vijaya Bank and Berger Paints.

PNB already has ongoing ventures with Principal Group, Vijaya Bank and Berger Paints.

Its existing ventures that have holdings by these partners in varying degrees are Principal

PNB Asset Management Co, Principal PNB Insurance Broking and Principal PNB

Financial Planner (for distribution of mutual funds). Mr Dhawan said that floating a life

insurance arm would be another step in PNB becoming a one-stop-shop for all financial

products.

Source: HBL (inet) Date: 2005.07.19


20

ITGI Ties Up With Mumbai Bank, Will Sell Its Products

IFFCO TOKIO General Insurance Company Limited, or ITGI, has announced a

bancassurance alliance with the Mumbai-based urban cooperative bank, the Janakalyan

Sahakari Bank, to sell the banks products and services.

The latest referral arrangement with the bank will synergise the company’s technical

expertise in offering best-in-class non-life insurance products with the established and

widespread network of Jankalyan Sahkari bank, said Mr N. K. Kedia, executive director,

IFFCO TOKIO General Insurance Company Limited. This alliance creates an important

marketing and distribution opportunity for our growing business in this region. Our aim is to act

as total insurance solution provider for the bank customers, he added.

ITGI will offer insurance products catering to both the commercial business as well as

retail segment of Janakalyan Sahakari Bank. This referral arrangement will provide ITGI

easy access to the banks client base. On the other hand, the bank will benefit by earning

revenues through enhancing profitability out of the referral arrangement with ITGI. This

alliance takes us another step towards our aim of becoming a one-stop-shop to meet all

the financial needs of our customers, commented Mr N.D. Behere, chief executive officer,

Jankalyan Sahakari Bank.

Leveraging on the reach of our branch network and on ITGIs strengths and their superior

products and services, will equip us to make inroads into the bancassurance market, he

added. ITGI, a joint venture promoted by Indian Farmers Fertilizer Cooperative IFFCO and

its associates and the Tokio Marine and Nichido Fire, is the largest insurance company in

Japan.



21

Reliance Cap in Retail Foray

Former ITC treasury head named chief executive officer of R Trade. Reliance Capital, a

Anil Ambani company, has formed a retail distribution arm, R Trade, for selling financial

products. Sudip Bandyopadhyay, a former head of treasury at Kolkata-based ITC, has

been appointed the chief executive officer of R Trade, sources said. Reliance Capital has

an asset management company and a non-life insurance company under its umbrella. It

plans to enter into life insurance business at a later stage and already holds a a license for

that. R Trade has started recruiting its staff. It will distribute all sorts of financial products

including insurance and mutual fund units, said sources. Reliance Capital is also drawing

up plans for entering into consumer finance. A beginning could even be made through

acquisition of loan portfolios, and eventually be present in the A to Z of financial services,

the sources said.



22

Yes Bank, SIDBI Announce Alliance

YES Bank and the Small Industries Development Bank of India, or SIDBI, on Tuesday

announced a strategic alliance to provide a wide range of financial services and products

to the Small & Medium Enterprises, or SMEs.

The first private bank in India to tie up with SIDBI, the mutual agreement will lead to

forming a co-brand YES-SIDBI Enterprise under which a full range of financial services will

be provided to existing and new customers. This alliance is a reflection of SIDBIs vision of

bank within a bank, said Mr N. Balasubramanian, chairman and managing director, SIDBI.

In due course, YES Bank and SIDBI would also look at sharing of distribution network,

wherever necessary, to provide a single window to SME customers, he added.

While SIDBI will mainly provide term loan financing, YES Bank will offer other financial

products to eligible borrowers including working capital, trade services, cash management,

foreign exchange, investment and insurance. The products offered jointly will complement

each others capabilities and provide a one-stop-shop for SME customers.

There is tremendous synergy between YES Banks business banking strategy and SIDBI,

and through our co-branded alliance we aspire to provide a comprehensive range of

financial solutions to customers across the country, said Mr Rana Kapoor, managing

director and chief executive officer, YES Bank.



23

Il&Fs Investsmart Plans Insurance Broking IL&FS Investsmart, a financial service provider, plans to market life and general insurance

products in the next four months through its subsidiary IL&FS Investsmart Insurance and

Risk Management Services Ltd (IIIRMSL).

We are planning to foray in insurance broking through our subsidiary IIIRMSL. We will tie

up with some insurance companies and distribute their products, said Vipul Shah, head-

primary market and new initiatives, IL&FS Investsmart. Last month, the company received

the license for marketing insurance products from Insurance Regulatory and Development

Authority (IRDA).

IIIRMSL, which was earlier engaged in the marketing and distribution of insurance

products as a corporate agent of Life Insurance Corporation and Iffco-Tokyo General

Insurance Company, has surrendered its corporate agency license. The company also

intends to tie up with select banks and establish product-based alliances to provide

investment advisory services to the banking clients.

At present, we are in talk with a number of small banks offering depository services but not

broking services. The non-conflicting nature of the businesses between the two alliance

partners will provide us better terms to get tie-ups, Shah said. IL&FS Investsmart is

launching its public issue with a price band of Rs 110 to Rs 125. The offer comprises 88

lakh equity shares and offer for sale of 26 lakh equity shares. Currently, IL&FS holds

51.34 per cent stake in IL&FS Investsmart.

Commenting on the IL&FS Investsmarts entry into insurance broking, Shah said: Our foray

into insurance broking makes sense as we already have an established network and

products in our basket. We already have a vast data base of investors and corporate and

access to infrastructure. Moreover, one of our subsidiaries, IL&FS Academy for Insurance

and Finance Ltd will train desired personnel to work for us. However, Shah avoided

commenting on the insurance companies with whom IL&FS Investsmart may join hands.

IL&FS Investsmart deals in the areas of investment management and advisory services

such as merchant banking, project syndication, equity and debt broking and distribution of

financial products through network in 62 cities through 30 branches and 123 business

partners.

Source: BS (inet) - Date: 2005.07.05 Distribution of Financial Products


24

Private Insurers Reach Out To Rural Customers

The Life Insurance Corporation of India sells about 23 per cent (62 lakh policies) of its total

number of policies in the rural areas, a segment that is integral to its social security

objectives. Rural insurance, much like priority sector lending in banking, is seen as some

kind of a poison pill by the private sector players in the insurance industry. Insurance

companies are mandated to sell 7 per cent, 9 per cent, 12 per cent, 14 per cent and 16

per cent of their policies in rural areas in the first, second, third, fourth and fifth financial

years, respectively.

A change in the definition of what constitutes 'rural' has given some leeway for insurance

companies to get in the mandatory percentage. In August 2004, Insurance Regulatory and

Development Authority altered the definition, aligning it with the census definition of 'rural'.

The census does not define rural area. It defines only an urban area. And by inference,

what is not urban is a rural area.

The erstwhile IRDA definition of rural areas included all areas with a population of less

than 5,000, with a density of population less than 400 sq km and where at least 75 per

cent of the male working population was engaged in agricultural pursuits. The IRDA had

amended the definitions earlier in 2002 to bring down the requirement stipulating that at

least 25 per cent of the population had to be engaged in agricultural pursuits.

The revised definition has widened the market. Mr Vivek Khanna, Director, Marketing,

Aviva Life Insurance Company, said, ""A couple of thousand villages would now be

brought under the fold. The earlier definition meant that only some remote villages could

be tapped. And there is no ambiguity now.""

Ms Anjana Grewal, Vice-President of Marketing at Birla Sun Life Insurance Company,

said, ""The revised definition brings a larger part of the population under 'rural' - almost 72

per cent compared to 42 per cent under the earlier definition. What this would do is make

it possible for insurance companies to introduce different products with higher premiums.""

According to analysts, 80 per cent of the rural population earns less than Rs 6,000 a

month and a high premium may not suit them. Designing customized products and

developing infrastructure and distribution systems is the way towards tapping this

segment, they said. Ms Shikha Sharma, MD, ICICI Prudential, said, "We have been able

to hit the rural pockets through NGOs and direct marketing." Distribution of Financial Products


25

ICICI Prudential's rural distribution model involves agents, brokers as well as referral

arrangements with NGOs, micro-finance institutions and corporates. There is a presence

in 15 States through partnership arrangements with Uttaranchal Co-operative Marketing

Federation, nLog Communications, ICICI Bank and ITC's e-Choupal. As of 2003-04,

64,764 policies were sold.

According to Mr Sam Ghosh, Managing Director, Bajaj Allianz Life Insurance Company,

""Rural policies are not an issue for us; we are present in more than 300 towns across the

country and our offices and agents find it easy to reach and sell in rural areas.""

Tata AIG has also been working with brokers, corporate agents and NGOs. It offers

products with premium ranging from Rs 120 to Rs 720 per annum with coverage ranging

from Rs 15,000 to Rs 60,000. For 2004-05, 19 per cent of their business came from rural

and social insurance.

Mr Vijay Atre, National Head, Rural Insurance, Tata AIG, said, ""We have created rural

community insurance groups. This 120-strong self-help group consists mainly of women. It

has been very successful in Andhra Pradesh. In areas like Latur and Osmanabad, we

work with women's federations where there is the concept of cluster leaders.""

While these tie-ups seem to be achieving the twin objectives of social rehabilitation and

distribution, there is still a long way to go. Most private players admit that the rural areas

can never be their target audience. Insurance will continue to be urban-centric. As Mr Atre

said, ""When one talks about rural insurance, there is confusion about whether it is a

product, a distribution channel or a market. It's about time it is considered a market.""



26

Sundaram mutual signs distribution pact with IOB

Sundaram Mutual Fund has signed a new distribution agreement with Indian Overseas

Bank (IOB) that will see the latter distribute the entire range of Sundaram Mutual's

products through select branches,

IOB operates. 1,700 branches throughout the country with over 60 per cent of these

situated in the southern States, "A bank has phenomenal reach and trust with the average

retail investor, Retail is the way forward for our business, We hope this initiative will help

us broaden our retail presence," said Mr T.P. Kaman, Managing Director of Sundaram

Mutual Fund, speaking on this occasion.

The fund will be imparting training to IOB staff in the distribution of mutual fund products.

IOB, in turn will use in-house IT to provide customer service.

"Banks have to explore new means to augment their non-interest income; we would like to

move towards delivering complete financial solutions to our customers. We chose

Sundaram Mutual as our partner because we are confident about the quality of their

products, given the backing of the reputed Sundaram Finance group," said Mr S.C. Gupta,

Chairman and Managing Director of IOB, who was here for the signing of the agreement.

Mr T.T. Srinivasaraghavan, Director, Sundaram Finance, said that the Sundaram group

would extend all possible support to IOB to make sure that this distribution arrangement

delivered good results, Sundaram Mutual Fund's products will initially be made available

through 33 key branches of the bank. The business will be scaled up over the next couple

of years.

Source: HBLC - Date: 2005.02.25


27

JM Financial -- Retail Foray Ticks ??? Up Interest

JM Financial, a company into distribution of capital market products, has been in the

limelight over the last few days. In the last two trading sessions, the stock price of the

company has gained over 30 per cent. Dealers said the sudden interest in the stock is due

to the company's plan to enter into retail stock broking and other retail products. The talk is

that the company has strong network and would do well in the retail business.

Dealers said with several big public issues lined up this year, the income of the company

is expected to be good. JM Financial is one of the biggest fund raisers for the IPOs. The

talk is that the first half of current fiscal was good due to some of the big IPOs that hit the

market. On Friday (3rd Feb), the stock price of the company gained 12.81 per cent at Rs

103 on BSE with volume of 25236 shares.

Dealers said the interest in the stock has come due to one of the company's subsidiaries

setting up multiplexes under ""INOX"" brand in various parts of the country. Multiplexes of

the company are already operational in 5 cities. The talk is that the multiplex business that

has started making profit at operational levels is expected to turnaround soon. Several

institutional investors have shown interest in the stock as they feel that the company is just

getting the valuation of a chemical company and the full valuation of the multiplex

business is yet to be discounted.



28

Vijaya Bank Vends Principal Group’s MF Products

State-owned Vijaya Bank launched the distribution of Principal Group's mutual funds from

its branches. The move follows the tripartite partnership between Punjab National Bank,

Vijaya Bank and the Principal Financial Group to float an asset management company

that will sell long-term mutual funds and related financial products.

As part of this transaction, the Principal Financial Group will roll its existing fund

management company, Principal Asset Management Company, into the joint venture. The

Principal group is likely to benefit from the distribution of its products through over 5,000

branches of Punjab National Bank and Vijaya Bank.

Source: HBL - Date: 2004.01.13


29

Section lll: Abstracts of research articles

How to market to financial services Roger Slavens. B to B. Chicago: Mar 13, 2006.Vol.91, Issue. 3; pg. 20, 2 pgs

Abstract The financial services industry continues to grow at a healthy clip due to the overall

expanding economy, according to analysts and insiders. And with the baby boomer

generation now reaching retirement age, there is no sign of this growth letting up. The hot

investment choices right now are simplified employee pension accounts, fund of funds,

hedge funds and individual stocks. Here are several constructive tips on how to reach and

engage the industry's major brokerages and banks: 1. When selling a fund or other

investment product, build a strong consumer brand that will get their attention. 2. Sell your

solutions to the senior management first. 3. Be mindful of this approval cycle time.

Integrated product distribution: Crossing the Lines Vikki Spencer. Canadian Underwriter. Don Mills: Jun 2000.Vol.67, Issue. 6; pg. 12, 4 pgs

Abstract Fuelled by mergers, acquisitions, alliances and regulatory change, the idea of one-stop

financial services shopping is becoming a reality south of the border. With caution, several

insurers and brokers in Canada have broadened their focus to "test the market" on

integrated product selling. Armed with the close relationship with customers, independent

brokers may well be in a superior position of strength in cashing in on integrated product

distribution.

The impact of information technology on customer and supplier relationships in the financial services Paul Mulligan, Steven R Gordon. International Journal of Service Industry

Management. Bradford: 2002.Vol.13, Issue. 1; pg. 29, 18 pgs

Abstract This study examines the role that information technology plays in supporting relationships

between customers and suppliers in the financial service industry. It traces the

interrelationships among the different sectors of this industry - brokerage houses, retail

banks, institutional banks, mutual funds, insurance underwriters, and others - and

identifies roles that information technology and electronic service delivery can play in

creating and supporting inter-organizational integration across sector boundaries. It further


30

identifies the opportunities for and threats to these relationships caused, in large part, by

the continuing evolution of information technology. This study will help managers in the

financial services to analyze the opportunities and assess the risks of building tighter

relationships with their customers and suppliers through electronic commerce.

The value of multi-channel distribution systems in the financial services sector Easingwood, Christopher, Storey, Christopher. The services Industries Journal London:

Apr 1996.Vol.16, Issue.2; pg.223, 19pgs

Abstract An examination of the use of multiple distribution channels in the marketing of financial

products in the UK is conducted. A cluster analysis of 153 new financial products shows

that 85% of the products belong in one of three multi-channel distribution channels: 1. a

balanced strategy draws on all the distribution routes; Network strategies utilize a network

of outlets; 2. Arm's Length strategies employ those channels such as direct mail, direct

response advertising or intermediaries that do not involve direct contact between company

staff and customers. Finally, an association between the use of multiple channels,

especially if they are used intensively, and success is demonstrated. Success is estimated

both on a single overall scale but also on a number of sub-dimensions.

Strategies for Buying and selling Mutual Funds Toolson Richard B Journal of

Accountancy. New York Oct 1992.Vol.174, Issue.4; pg.37, 6pgs

Abstract As investor interest in mutual funds continues to grow, CPAs must be able to advise

clients on the tax consequences of buying and selling mutual fund shares and help

develop strategies to minimize the tax. Mutual fund shareholders receive distributions in

the form of ordinary dividends, capital gains dividends, exempt-interest dividends, and

nontaxable return of capital. Distributions reinvested in additional shares are taxable

income. Investors can minimize their tax liabilities by timing their purchases according to

fund distributions, choosing funds with low portfolio turnover, and taking advantage of a

fund's capital loss carryovers. The cost basis of mutual fund shares can be calculated

using the average cost method, the specific identification method, or the first in, first out

(FIFO) method. The specific identification method offers the most flexibility, while the FIFO

method often results in the largest capital gains. A proper understanding of the rules


31

involved in buying and selling mutual fund shares can minimize the resulting income tax

liability.

From service to product Anonymous International Journal of Retail & Distribution Management. Bradford: Winter

1994. Pg.iii, 2pgs

Abstract To be competitive today, retail banking must not only operate in a fundamentally different

way but also it must learn from other industries about the business it is in, and then learn

to do fundamentally different things. Private individuals need to be able to access their

money quickly and easily, without undue hassle, while at the same time being able to

access professional advice when and if they choose. And, significantly, they prefer to be

advised by a machine that "funds are not available" than to have a clerk refuse to cash

their check. A solution implemented by Massachusetts-based BayBanks is discussed. The

company aligned itself more to the world of retail stores and mail-order companies than

the traditional banks. The first strategy was to establish a 24-hour customer service

center. Next, a significant improvement of the ATM network was set in place to enhance

the customer convenience factor. The next step was to provide cardholders with the

means to buy and sell mutual funds. Finally, one million catalogs of over 160 different

banking and financial products were sent out.

All around the globe, changing demographics are ensuring that the responsibility for

retirement planning and the risk of investment performance is being passed to the

individual. The asset management industry has responded with the growth of third party

fund distribution to provide investment choice. The emergence of open architecture will

impact the structure of the investment fund industry and will affect how the different parts

of the investment value chain interact, from asset gathering, through asset management,

to asset servicing. The adoption of open architecture introduces further unbundling of the

value chain through a clear separation of product (i.e., tax wrapper) manufacturing, and

investment fund manufacturing. The logic of this unbundling is that a range of investment

styles and asset types is required in order to deliver sustained investment performance

over an extended period through different economic cycles.


32

Banks urged to form post office links European Banker. Dublin: Oct 2005. pg. 4

Abstract European banks are not capitalizing on opportunities to sell banking products via their

domestic markets' post offices and to take advantage of the latter's huge distribution

capabilities and branding. With the mail market shrinking, post offices themselves must

also seek to form alliances with banks to sell financial products. This was the key

message put forward by Carl Holsters, a member of the Belgian Post Group's executive

committee, at VRL's International Retail Banking Forum in September. Holsters pointed

out those Italian post offices are now generating nearly one-half of their profits from

banking.


33

Documents

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