Comaprative Analaysis of LIC With HDFC

7/28/2019 Comaprative Analaysis of LIC With HDFC

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EXECUTIVE SUMMARY

Application for insurance: This is the form on where you state information

and answer questions from the insurance company about yourself and yourhistory. This application along with information from a medical examination,

if taken, from your physicians, any hospitals you may have visited and

investigation are what's used by the insurance company to decide whether

or not to offer you life insurance and at what rate.

Accident Benefit: A rider or An add-on with a life policy. It compensates a

policyholder in the event of death or injury by accident

Annuity: An investment option that makes a series of regular payments to an

individual in exchange for a premium or a series of premier.

Appreciate: To grow in value

Asset: Everything owned or due to a person

Asset allocation: How your investments are spread across various asset

classes

Beneficiary: The person(s) named in the policy to receive the life insurance

proceeds upon the death of the insured.

Bond: It is like an IOU. By buying a bond you loan money to a company, a

municipality, state or the Central Government

Bonus: The amount paid as return in a with-profit policy. The bonus,

expressed as a percentage of the sum assured, is generally declared every

year. The amount is linked to the profits earned by the insurer. Depending

on the time of withdrawal, there are two kinds of bonuses

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reversionary and cash. A reversionary bonus can be encashed only on

maturity of the policy; a cash bonus can be withdrawn when declared

Budget: It is a tool used to monitor and control expenditures and purchases.

Cash (Surrender) Value: The amount that is available in cash for loans and

that may be available for withdrawals in a whole life insurance, universal life

insurance or survivorship life insurance policy. Accessing Cash Surrender

Value may reduce the death benefit and may increase the risk of lapse.

Contestability, Contestable Clause: In insurance there is a clause, which

explains the conditions under which the insurer may contest or void the life

insurance policy. This contestability is for a limited period of time, which in

most states is two years. After that period of time the insurance company

cannot contest the policy.

Convertible Term Insurance: Term insurance which can be exchanged

(converted), at the option of the policy owner and without evidence of

insurability, for a whole life insurance policy or universal life insurance policy.

Capital gains: Profit earned from the sale of stocks, mutual fund units and

real estate. Long-term capital gains arise from assets owned for more than a

year while short-term capital gains are made from assets owned for less

than a year.

.

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TABLE OF CONTENTS

3

S. NO. Descriptions Page no.

1. Introduction to the industry 7-25

2. Introduction to the Organization 26-48

3. Research Methodology

3.1Title of the Study

3.2Duration of the Project

3.3Objective of the Study

3.4Types of Research

3.5Collection Method and Sample Size

a. Scope of Study

3.7Limitation of Study

49-64

4. Facts and Findings 65-66

5. Data Analysis and Interpretation 67-73

6. Swot Analysis 74-75

7. Conclusion 76

8. Recommendation and Suggestion 77

9. Appendix 78-81

10. BIBLIOGRAPHY 82


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1. INTRODUCTION TO THE INDUSTRY

Banking Industry

The Banking Industry was once a simple and reliable business that took deposits

from investors at a lower interest rate and loaned it out to borrowers at a higherrate.

However deregulation and technology led to a revolution in the Banking Industry

that saw it transformed. Banks have become global industrial powerhouses that

have created ever more complex products that use risk and securitisation in models

that only PhD students can understand. Through technology development, banking

services have become available 24 hours a day, 365 days a week, through ATMs,

at online bankings, and in electronically enabled exchanges where everything from

stocks to currency futures contracts can be traded .

The Banking Industry at its core provides access to credit. In the lenders case, this

includes access to their own savings and investments, and interest payments on

those amounts. In the case of borrowers, it includes access to loans for the

creditworthy, at a competitive interest rate.

Banking services include transactional services, such as verification of account

details, account balance details and the transfer of funds, as well as advisory

services, that help individuals and institutions to properly plan and manage their

finances. Online banking channels have become key in the last 10 years. The

collapse of the Banking Industry in the Financial Crisis, however, means that some

of the more extreme risk-taking and complex securitisation activities that banks

increasingly engaged in since 2000 will be limited and carefully watched, to ensure

that there is not another banking system meltdown in the future.

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Size of global banking industry

Assets of the largest 1,000 banks in the world grew by 6.8% in the 2008/2009

financial year to a record $96.4 trillion while profits declined by 85% to $115bn.

Growth in assets in adverse market conditions was largely a result of

recapitalization. EU banks held the largest share of the total, 56% in 2008/2009,down from 61% in the previous year. Asian banks' share increased from 12% to

14% during the year, while the share of US banks increased from 11% to 13%. Fee

revenue generated by global investment banking totalled $66.3bn in 2009, up 12%

on the previous year.[10]

The United States has the most banks in the world in terms of institutions (7,085 at

the end of 2008) and possibly branches (82,000).[citation needed] This is an

indicator of the geography and regulatory structure of the USA, resulting in a large

number of small to medium-sized institutions in its banking system. As of Nov 2009,

China's top 4 banks have in excess of 67,000 branches (ICBC:18000+,

BOC:12000+, CCB:13000+, ABC:24000+) with an additional 140 smaller banks

with an undetermined number of branches. Japan had 129 banks and 12,000

branches. In 2004, Germany, France, and Italy each had more than 30,000

branchesmore than double the 15,000 branches in the UK.[10]

Types of banks

Banks' activities can be divided into retail banking, dealing directly with individuals

and small businesses; business banking, providing services to mid-market

business; corporate banking, directed at large business entities; private banking,

providing wealth management services to high net worth individuals and families;

and investment banking, relating to activities on the

financial markets. Most banks are profit-making, private enterprises. However,

some are owned by government, or are non-profit organizations.

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Types of retail banks

National Bank of the Republic, Salt Lake City 1908

ATM Al-Rajhi Bank

National Copper Bank, Salt Lake City 1911

Commercial bank: the term used for a normal bank to distinguish it from an

investment bank. After the Great Depression, the U.S. Congress required that

banks only engage in banking activities, whereas investment banks were limited to

capital market activities. Since the two no longer have to be under separate

ownership, some use the term "commercial bank" to refer to a bank or a division of

a bank that mostly deals with deposits and loans from corporations or largebusinesses.

Community banks: locally operated financial institutions that empower employees

to make local decisions to serve their customers and the partners.

Community development banks: regulated banks that provide financial services

and credit to under-served markets or populations.

Credit unions: not-for-profit cooperatives owned by the depositors and often

offering rates more favorable than for-profit banks. Typically, membership is

restricted to employees of a particular company, residents of a defined

neighborhood, members of a certain labor union or religious organizations, and

their immediate families.

Postal savings banks: savings banks associated with national postal systems.

Private banks: banks that manage the assets of high net worth individuals.

Historically a minimum of USD 1 million was required to open an account,

however, over the last years many private banks have lowered their entry hurdles

to USD 250,000 for private investors.[citation needed]

Offshore banks: banks located in jurisdictions with low taxation and regulation.

Many offshore banks are essentially private banks.

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Savings bank: in Europe, savings banks took their roots in the 19th or sometimes

even in the 18th century. Their original objective was to provide easily accessible

savings products to all strata of the population. In some countries, savings banks

were created on public initiative; in others, socially committed individuals created

foundations to put in place the necessary infrastructure. Nowadays, European

savings banks have kept their focus on retail banking: payments, savings

products, credits and insurances for individuals or small and medium-sized

enterprises. Apart from this retail focus, they also differ from commercial banks by

their broadly decentralized distribution network, providing local and regional

outreachand by their socially responsible approach to business and society.

Building societies and Landesbanks: institutions that conduct retail banking.

Ethical banks: banks that prioritize the transparency of all operations and make

only what they consider to be socially-responsible investments.

A Direct or Internet-Only bank is a banking operation without any physical bank

branches, conceived and implemented wholly with networked computers.

Types of investment banks

Investment banks "underwrite" (guarantee the sale of) stock and bond issues,

trade for their own accounts, make markets, and advise corporations on capital

market activities such as mergers and acquisitions.

Merchant banks were traditionally banks which engaged in trade finance. The

modern definition, however, refers to banks which provide capital to firms in the

form of shares rather than loans. Unlike venture capital firms, they tend not to

invest in new companies.

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Both combined

Universal banks, more commonly known as financial services companies, engage

in several of these activities. These big banks are very diversified groups that,

among other services, also distribute insurance hence the term banc assurance,

a portmanteau word combining "banque or bank" and "assurance", signifying that

both banking and insurance are provided by the same corporate entity.

Other types of banks

Central banks are normally government-owned and charged with quasi-regulatory

responsibilities, such as supervising commercial banks, or controlling the cashinterest rate. They generally provide liquidity to the banking system and act as the

lender of last resort in event of a crisis.

Islamic banks adhere to the concepts of Islamic law. This form of banking revolves

around several well-established principles based on Islamic canons. All banking

activities must avoid interest, a concept that is forbidden in Islam. Instead, the

bank earns profit (markup) and fees on the financing facilities that it extends to

customers.

ABOUT HDFC STANDARD LIFE INSURANCE

All the human beings on the earth know that they will die in future but they dont

want to die. They want to fulfill all the dreams, which they had thought, but there are

times when all these dreams cant come true. Death is inevitable and yet we live our

lives obvious to reality that may strike- when we have no idea. And when it happens,

all the dreams come crashing down.

In the words of D S Hansel Insurance may be defined as a social device

providing financial compensation for the effects of misfortune, the payment being

made from the accumulated contributions of all the parties participating in the

scheme

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Life insurance is the only tool to secure our life in future. It also provides a

safe guard to the uncertainty of our life. Life insurance is the cheapest investment

tool in which we can earn more in a short period

The function of insurance is to protect you against losses you can't afford.

This is done by transferring the risks of a person, business, or organization -- the

"insured" -- to an insurancecompany, or "insurer. The insurer then reimburses the insured for"covered" losses -- i.e., those losses it pays for under the policy's terms. As the insurance

consumer, you pay an amount of money, called a premium, to the insurer to transfer the risk. The

insurer pools all its premiums into a large fund, and when a policyholder has a loss, the insurer

draws funds from the pool to pay for the loss. Life is full of unexpected events that can create large

financial losses. For example, whenever you drive, it is possible that you may have a costly

accident. Risks affect you by causing worry about potential loss and how to deal with the

consequences. Insurance reduces anxiety over a possible loss and absorbs the financial brunt of its

consequences.

India has traditionally been a high savings oriented country being on par with the

thrifty Japan. Insurance sector in the United States of America is as big in

size as the banking industry there. This gives us an idea of how important the sector

is. Insurance sector channelises the savings of the people to long-term investments.

In India where infrastructure is said to be of critical importance, this sector will bring

the nations own money for the nation.

The global life insurance market stands at $1,521.2 billion while the non-life

insurance market is placed at $922.4 billion.

HISTORY OF LIFE INSURANCE

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Insurance concept had been found out way behind in 13 th and 14th century.

The earliest reference to insurance has been found Babylonia, the Greeks and the

Romans. The use of insurance appeared in the account of North Italian Merchant

Bank that then dominated the international trade in Europe at that time. The oldest

and earliest record of insurance come in the form of marine insurance where ships

and the cargo were insured against perils such as pirates, storm, mutiny and wars.

The first company known as the Sun Insurance Office Ltd. was set up in the

Calcutta in the years 1710. After that a number of companies were established for

marine and general insurance. The history of life insurance in India dates back to

1818 when it was conceived as a means to provide for

English Widows. Interestingly in those days a higher premium was charged

for Indian lives than the non-Indian lives as Indian lives were considered more riskier

for coverage.

The Bombay Mutual Life Insurance Society started its business in 1870. It

was the first company to charge same premium for both Indian and non-Indian lives.

The Oriental Assurance Company was established in 1880. The first general

insurance company- Tital Insurance Company Limited was established in 1850. Till

the end of nineteenth century insurance business was almost entirely in the hands of

overseas companies.

Insurance regulation formally began in India with the passing of the Life

Insurance Companies Act of 1912 and the provident fund Act of 1912. Several

frauds during 20's and 30's sullied insurance business in India. By 1938 there were

176 insurance companies. The first comprehensive legislation was introduced with

the Insurance Act of 1938 that provided strict State Control over insurance business.

OVERVIEW

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With largest number of life insurance policies in force in the world, Insurance

happens to be a mega opportunity in India. Its a business growing at the rate of 15-

20 per cent annually and presently is of the order of Rs 450 billion. Together with

banking services, it adds about 7 per cent to the countrys GDP. Gross premium

collection is nearly 2 per cent of GDP and funds available with LIC for investments

are 8 per cent of GDP.

Yet, nearly 80 per cent of Indian population is without life insurance cover,

health insurance and non-life insurance continue to be below international

standards. And this part of the population is also subject to weak social security and

pension systems with hardly any old age income security. This itself is an indicator

that growth potential for the insurance sector is immense.

A well-developed and evolved insurance sector is needed for economic

development as it provides long-term funds for infrastructure development and at the

same time strengthens the risk taking ability. It is estimated that over the next ten

years India would require investments of the order of one trillion US dollar. The

Insurance sector, to some extent, can enable investments in infrastructure

development to sustain economic growth of the country.

With a large capital outlay and long gestation periods, infrastructure projects

are fraught with a multitude of risks throughout the development, construction and

operation stages. These include risks associated with project implementation,

including geological risks, maintenance, commercial and political risks.

Without covering these risks the financial institutions are not willing to commit

funds to the sector, especially because the financing of most private

projects is on a limited or non- recourse basis. Insurance companies not only

provide risk cover to infrastructure projects, they also contribute long-term funds. In

fact, insurance companies are an ideal source of long-term debt and equity for

infrastructure projects. IRDA regulations require insurance companies to invest not

less than 15 percent of their funds in infrastructure and social sectors. International

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Insurance companies also invest their funds in such projects. Insurance is a federal

subject in India. There are two legislations that govern the sector- The Insurance

Act- 1938 and the IRDA Act- 1999.

PRESENT SCENARIO

The Government of India liberalized the insurance sector in March 2000 with the

passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting

all entry restrictions for private players and allowing foreign players to enter the

market with some limits on direct foreign ownership. Under the current guidelines,

there is a 26 percent equity cap for foreign partners in an insurance company. There

is a proposal to increase this limit to 49 percent. Premium rates of most general

insurance policies come under the purview of the government appointed Tariff

Advisory Committee.

INSURANCE IN INDIA

The insurance sector in India has come a full circle from being an open competitive

market to nationalization and back to a liberalized market again. Tracing the

developments in the Indian insurance sector reveals the 360 degree turn witnessed

over a period of almost two centuries.

A BRIEF HISTORY OF THE INSURANCE SECTOR:-

The business of life insurance in India in its existing form started in India in the

year1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in India are:

MILESTONES:-

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1912: The Indian Life Assurance Companies Act enacted as the first statute to

regulate the life insurance business.1928: The Indian Insurance Companies Act

enacted to enable the government to collect statistical information about both life

and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with theobjective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the

central government and nationalized. LIC formed by an Act of Parliament. LIC Act,

1956, with a capital contribution of Rs. 5 crore from the Government of India. The

General insurance business in India, on the other hand, can trace its roots to the

Triton Insurance Company Ltd., the first general insurance company established in

the year 1850 in Calcutta by the British.

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all

classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India,

frames a code of conduct for ensuring fair conduct and sound business practices

1968: The Insurance Act amended to regulate investments and set minimum

solvency margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the

General Insurance business in India with effect from 1stJanuary 1973 & 107 insurers

amalgamated and grouped into four companies viz.

The National Insurance Company Ltd.,

The New India Assurance Company Ltd.,

The Oriental Insurance Company Ltd. and

The United India Insurance Company Ltd.

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LIFE INSURANCE MARKET

`The Life Insurance market in India is an underdeveloped market that was

only tapped by the state owned LIC till the entry of private insurers. The penetration

of life insurance products was 19 percent of the total 400 million of the insurable

population. The state owned LIC sold insurance as a tax instrument, not as a

product giving protection. Most customers were under- insured with no flexibility or

transparency in the products. With the entry of the private insurers the rules of the

game have changed.

The 15 private insurers in the life insurance market have already grabbed

nearly 14 percent of the market in terms of premium income. The new business

premiums of the 15 private players have tripled to Rs 2000 crores in 2004- 05over

last year.

Meanwhile, state owned LIC's new premium business has fallen. Innovative

products, smart marketing and aggressive distribution. That's the

triple whammy combination that has enabled fledgling private insurance

companies to sign up Indian customers faster than anyone ever expected. Indians,

who have always seen life insurance as a tax saving device, are now suddenlyturning to the private sector and snapping up the new innovative products on offer.

The growing popularity of the private insurers shows in other ways. They are

coining money in new niches that they have introduced. The state owned companies

still dominate segments like endowments and money back policies.

But in the annuity or pension products business, the private insurers have

already wrested over 40 percent of the market. And in the popular unit-linked

insurance schemes they have a virtual monopoly, with over 90 percent of the

customers. The private insurers also seem to be scoring big in other ways- they are

persuading people to take out bigger policies.

For instance, the average size of a life insurance policy before privatization

was around Rs 50,000. That has risen to about Rs 80,000.

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DEFINITION OF INSURANCE

Insurance is a contractual-type financial intermediary that offers the public protection

against the financial costs associated with the loss of life, health, or property in

exchange for premiums. An agreement that guarantees the payment of a stated

amount of monetary benefits upon the death of the insured. Risk insurance intended

as protection against the financial consequences of the death of the insured person,

which takes the form of payment of a previously agreed lump sum or pension to a

beneficiary, if the insured person dies during the term of insurance. In the case of

pure life insurance, without any endowment insurance component, no payments are

due if the insured person survives the term of insurance.

What is Insurance?

Life Insurance is a contract providing for payment of a sum of money to the

person assured or, to the person entitled to receive the same, on the happening of a

certain event.

A family is dependent for its food, clothing and shelter on the income broughtby the family's breadwinner. The family is secure so long as this breadwinner is alive

and is capable of earning. A sudden death (or disability) may leave the family in a

financially difficult situation.

Uncertainty of death is inherent in human life and this uncertainty makes it

necessary to have some protection against the financial loss arising from untimely

death. Life insurance offers this protection.The Greeks and Romans started the

earliest type of life insurance. Contributions were made by all surviving members for

the burial cost of a member. In case of the death of a member the cost of burial was

made out of the contributed fund.

In the 17th century, the Tontine Annuity system was introduced where

associations of individuals were formed without any reference to age, and a fund

was created by equal contributions from each member.

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Types of Insurance

Basically there are two types of Insurances:

Non-Life Insurance

Life Insurance

INSURANCE- The Need

Insurance is no longer a mundane source of protection from life and accidents.

Innovative products are offering investment opportunities. Money saved is money

earned. There are no two ways about it: the primary reason for picking up an

insurance product is to protect yourself, or your kin, from the vagaries of life. You

don't invest in insurance for the returns; rather, you invest in what they refer to as

regrettable necessities.

Of course, a large proportion of the instruments available in the country today

does offer some sort of return to the investor. But these endowment products, as

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INSURANCECC

NON-LIFEINSURANCE

LIFEINSURANCE

--MARINE

INSURANCE

--FIRE

INSURANCE

--MISCELLANEOUS

INSURANCE

VEHICLES

FURNITURE

BUILDING AIRCRAFTS

GENERAL

INTANGIBLES

--ONLY HUMAN LIFEINSURANCE

INCLUDES IN THIS

CATEGORY

--HUMAN BEINGS

SICKNESS, ILLNESSAND OTHER

ASSURANCE GIVEN

IN THIS CATEGORY

--LONG TERM

CONCEPT


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they are dubbed, benchmark their returns to the inflation rate. No, you aren't chasing

that 6 percent, you shouldn't be.

Perhaps you seek tax-concessions. For years, insurance products have been

an attractive vehicle to extract concessions from the tax-man. Even now, come

February and March, there is a rush for insurance policies in order to reduce the tax

bill.

But 3 things have changed: first, tax rates are not as high as they used to be

(thankfully, the peak rates of 70-90 per cent in 1960s have come down to 33 per

cent). Second, the concessions are still limited to a 20 per cent tax-shelter:

investment of Rs 10,000 in life insurance policies will net you a tax rebate of Rs

2,000. And, finally, other tax-saving schemes-primarily, the Public Provident Fund-

offer higher returns, and are more liquid.

Why do you need life Insurance?

You need Life Insurance because typically the need for income continues for those

who are financially dependent on you, but there is no guarantee of your ability to

earn consistently and for the rest of your life. Life insurance can help you safeguard

the financial needs of your family.This need has become even more important due to

steady disintegration of the prevalent joint family system,

REPLACEMENT OF INCOME

Life insurance products can provide support to the family and take care of the

family's financial requirements. It provides a lump sum or periodic payments to help

replace the income stream, in case of an unfortunate event or an untimely demise of

the breadwinner.

LIFESTYLE MAINTENANCE

Life insurance products can help you build a corpus to protect and maintain your

lifestyle against fluctuations in your future income.

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COST OF EDUCATION

You need to support your child with a sound educational background, to help your

child achieve his/her dreams. Life insurance products can help you fulfill these

needs, whether you are there or not.

Retirement Expenses

Retirement is an age when an individual has fulfilled almost all his responsibilities

and looks forward to relaxing. Life insurance products can help you lead a secure

and tension free retired life by ensuring that you get guaranteed pension.

MORTGAGE AND DEBT PROTECTION

With increasing consumerism and ever-rising demands, loans and debts are now

part of life. Life insurance products help you ensure that your family is not unduly

burdened with their repayments, in case of an unfortunate event or an untimely

demise of the breadwinner.

HARDSIP PROTECTION

Life insurance provides a sense of security to the income earner and to his/her

family. Buying life insurance frees the individual .

BENEFITS OF LIFE INSURANCE

Superior to Any Other Savings Plan, unlike any other savings plan, a life insurance

policy affords full protection against risk of death. In the event of death of a

policyholder, the insurance company makes available the full sum assured to the

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policyholders' near and dear ones. In comparison, any other savings plan would

amount to the total savings accumulated till date. If the death occurs prematurely,

such savings can be much lesser than the sum assured. Evidently, the potential

financial loss to the family of the policyholder is sizable.

Encourages and Forces Thrift

A savings deposit can easily be withdrawn. The payment of life insurance premiums,

however, is considered sacrosanct and is viewed with the same seriousness as the

payment of interest on a mortgage.

Easy Settlement and Protection against Creditor

A life insurance policy is the only financial instrument the proceeds of which can be

protected against the claims of a creditor of the assured by effecting a valid

assignment of the policy.

Administering the Legacy for Beneficiaries

Speculative or unwise expenses can quickly cause the proceeds to be squandered.

Several policies have foreseen this possibility and provide for payments over a

period of years or in a combination of installments and lump sum amounts.

Ready Marketability and Suitability for Quick Borrowing

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A life insurance policy can, after a certain time period (generally three years), be

surrendered for a cash value. The policy is also acceptable as a security for a

commercial loan.

Disability Benefits

Polices also include disability benefits. Typically, these provide for waiver of Death is

not the only hazard that is insured; many future premiums and payment of monthly

installments spread over certain time period.

Accidental Death Benefits

Many policies can also provide for an extra sum to be paid (typically equal to the

sum assured) if death occurs as a result of accident.

Tax Relief

Under the Indian Income Tax Act, the following tax is available:-

a) 20 % of the premium paid can be deducted from your total income

tax liability.

b) 100 % of the premium paid is deductible from your total taxable income.

When these benefits are factored in, it is found that most polices offer returns that

are comparable or even better than other saving modes such as PPF, NSC

etc. Moreover, the cost of insurance is a very negligible.

ROLE OF LIFE INSURANCE

Security and Stability

Investment

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Preservation of Health

Increase Efficiency

Self Reliance

Mental Peace

Planning of future

Safe guard against statutory liability

Capitalization of earning capacity

Exemption from Tax Liability

Safety to Investment Mode.

LIFE INSURANCE V/S OTHER INVESTMENTS

Most investment options make your money work harder, but there are no

substitutes to life insurance. Because only a life insurance policy gives you both -

risk cover against your life, as well as returns on your money invested.

Life insurance allows long tem savings to be made in a relatively painless

manner because of the low and convenient investments made through premiums.

Moreover, it encourages 'forced thrift' which means the insured is

Made to pay premiums and save money, which he/she may not do in the regular

course of life.

Should you require loans, say for building a house, it can be easily obtained

against a life insurance policy. Amongst the most known benefits of Life Insurance is

the savings on your income taxes.

Life insurance cannot be compared with any other form of investment as life

insurance gives you a life long benefit and returns on your money when it is most

required.

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Insurance premiums are linked to age of the life insured and the earlier you

buy, the lower are the premium requirements. Besides, the money stays invested for

a longer time and thereby maximizing your returns through the power of rupee

compounding. So, a life insurance policy is an ideal tool to gain security and ensure

savings.

Most importantly it provides you with that unique sense of security and peace of

mind that no other form of investment provides

2. INTRODUCTION TO THE COMPANY

The Housing Development Finance Corporation Limited (HDFC) was amongst the

first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set

up a bank in the private sector, as part of the RBI's liberalization of the Indian

Banking Industry in 1994.

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The bank was incorporated in August 1994 in the name of 'HDFC Bank

Limited', with its registered office in Mumbai, India. HDFC Bank commenced

operations as a Scheduled Commercial Bank in January 1995.

HDFC STANDARD LIFE INSURANCE COMPANY

Under this topic, the major headings that will be covered are as under:

HISTORICAL BACKGROUND BOARD OF DIRECTORS VISSION VALUES MISSION PROMOTERS GROUP COMPANIES DEPARTMENTATION

COMPANY HISTORY

HDFC STANDARD LIFE INSURANCE

HDFC Standard Life Insurance Company was incorporated on 14th August 2000,

under the name of HDFC Standard Life Insurance Company Limited.

Our ambition, tracing back to October 1995, was to be the first private

company to enter the life insurance market in India. On 23rd October 2000, this

ambition was realized, when HDFC Standard Life was the only life insurance

company to be granted a certificate of registration.

HDFC Standard Life Insurance Company Ltd. is one of Indias leading private life

insurance companies offering a range of individual and group insurance solutions. It

is a joint venture between Housing Development Finance Corporation Limited

(HDFC Ltd.), Indias leading housing finance institution and the Standard Life Group,

United Kingdom. Both the promoters are well known for their ethical dealings and

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financial strength and are thus committed to being a long-term player in the life

insurance industry important factors to consider when choosing your insurer.

HDFC Ltd. and Standard Life Group, UK, have a long and close relationship built

upon shared values and trust. The ambition of HDFC Standard Life is to mirror the

success of the parent companies and be the yardstick by which all other insurance

companies in India are measured.

As a joint venture of leading financial services groups, HDFC Standard Life has the

financial expertise required, to manage long-term investments safely and efficiently.

HDFC Standard Life offers a range of individual and group solutions, which can be

easily customized to your specific needs. Our group solutions have been designed

to offer you complete flexibility combined with a low charging structure.

The Companys premium income, including the first year premiums and renewal

premiums was Rs.1532.21 crores for the period April 2005 to March 2006. HDFC

Standard Life has covered over 1.6 million individuals. The Company has also

declared its 6th consecutive bonus in as many years for our with profit

policyholders.

Our Vision

'The most successful and admired life insurance company, which means that we are

the most trusted company, the easiest to deal with, offer the best value for money,

and set the standards in the industry'.

Our Values

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Values that we observe while we work:

Integrity

Innovation

Customer-centric

People-Care-One-for-all-and-all-for-one

Team-work

Joy and Simplicity

Accolades and Recognition

MISSION

Their Mission is:

To be the top new life insurance company in the market.

This does not just mean being the largest or the most productive company in the

market, rather it is a combination of several things like-

25

Rated by 'Businessworld' as 'India's Most Respected Private Life Insurance

Company' in 2004Rated as the "Best New Insurer - 2003" by Outlook Money magazine, Indias

number 1 personal finance magazine


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Customer service of the highest order

Value for money for customers

Professionalism in carrying out business

Innovative products to cater to different needs of different customers

Use of technology to improve service standards

Increasing market share

Core Values:

SECURITY: Providing long term financial security to our policyholders will be

our constant endeavor. TRUST: They appreciate the trust placed by their

policyholders in them. Hence, they will aim to manage their investments very

carefully.

INNOVATION: Recognizing the different needs of their customers, be

offering a range of innovative products to meet these needs

These would be clearer by diagram:-

Organizational Pattern Diagram

26

Chairman-Cum-Managing Director


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Organization Diagram of the Branch:

27

REGIONAL MANAGER

DIVISIONAL MANAGER

BRANCH MANAGER

AGENTS

DEVELOPMENT OFFICER

Branch

Sales


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Brief profile of the Board of Directors

28

(RM)

Sales

Manager

Unit

Manager

Insurance

AdvisorsDirect

Sales


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The Introduction

PROMOTERS

CORPORATE

The Joint Venture of HDFC & Standard Life

29

Market leader inthe Housing

Finance Sector

Over 2 million

satisfied customers

Over 1,00,000

Crores in Loan

Approvals

Ranked as Indias

3rd Best ManagedCompany by

Finance Asia-2005

Serving customers

for over 180 years

Currentlyadministers 125

billion in assets

Voted 5 Star Life

& Pensions

provider for last 10years

250 Branches

11,00,000

Customers

Multiple Products

- Protection

- Unit Linked- With Profit

More than8 lakh

policyholders

Servicing over 440towns in India


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HDFC Standard Life Insurance Company Limited was one of the first

companies to be granted license by the IRDA to operate in life insurance sector.

Each of the JV player is highly rated and been conferred with many awards. HDFC

is rated 'AAA' by both CRISIL and ICRA. Similarly, Standard Life is rated 'AAA' both

by Moody's and Standard and Poors. These reflect the efficiency with which HDFC

and Standard Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr

respectively.

The Partnership:

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HDFC and Standard Life first came together for a possible joint venture, to enter

the Life Insurance market, in January 1995. It was clear from the outset that both

companies shared similar values and beliefs and a strong relationship quickly

formed. In October 1995 the companies signed a 3 year joint venture agreement.

Around this time Standard Life purchased a 5% stake in HDFC, further

strengthening the relationship.

The next three years were filled with uncertainty, due to changes in

government and ongoing delays in getting the IRDA (Insurance Regulatory and

Development authority) Act passed in parliament. Despite this both companies

remained firmly committed to the venture.

In October 1998, the joint venture agreement was renewed and additional

resource made available. Around this time Standard Life purchased 2% of

Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also

started to use the services of the HDFC Treasury department to advise them upon

their investments in India.

Towards the end of 1999, the opening of the market looked very promising

and both companies agreed the time was right to move the operation to the next

level. Therefore, in January 2000 an expert team from the UK joined a hand picked

team from HDFC to form the core project team, based in Mumbai.

Around this time Standard Life purchased a further 5% stake in HDFC and a

5% stake in HDFC Bank.

In a further development Standard Life agreed to participate in the Asset

Management Company promoted by HDFC to enter the mutual fund market. The

Mutual Fund was launched on 20th July 2000.

Group companies

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HDFC is a highly diversified group. Its group Companies are:

HDFC Limited

HDFC was incorporated in 1977 with the primary

objective of meeting a social need - that of promoting

home ownership by providing long-term finance to

households for their housing needs. HDFC was promoted with an initial share capital

of Rs. 100 million.

HDFC Bank Limited

The Housing Development Finance Corporation

Limited (HDFC) was amongst the first to receiveapproval from the Reserve Bank of India to set up a

bank in the private sector. The bank was incorporated in August 1994 in the name of

HDFC Bank Limited, with its registered office in Mumbai.

HDFC Securities Limited

HDFC Securities Ltd was promoted by the HDFC

Bank & HDFC with the objective of providing the diverse

customer base of the HDFC Group and other investors,

a capability to transact in the Stock Exchanges & other

financial market transactions.HDFC securities, provides

you with the necessary tools to allocate, select and manage your investments

wisely, and also support it with the highest standards of service, convenience and

hassle-free trading tools.

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HDFC Asset Management Company Limited

HDFC Fund is a dominant player in the Indian mutual fund

space, recognized for its high levels of ethical and professional

conduct and a commitment towards enhancing investor interests.

HDFC Realty Limited

HDFC Realty is a new, organized

electronic marketplace for properties. HDFC

realty provides the entire gamut of real estate

services, bringing together the "clicks world" and the "bricks world" in a revolutionary

and user-friendly way. Making available the best guidance, and the most

professional, transparent, efficient service to the real estate customer.

With over one century of experience in the field of non-life insurance from Chubb

and HDFC's expertise from the financial segment, HDFC Chubb General Insurance

Company Limited has the consumer insight to make its product range world class

and comprehensive.

Standard Life

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Standard Life is Europe's largest mutual life

assurance company. Standard Life, which has been in the

life insurance business for the past 175 years, is a modern

company surviving quite a few changes since selling its

first policy in 1825.

The company expanded in the 19th century from its

original Edinburgh premises, opening offices in other towns and acquiring other

similar businesses.

Standard Life currently has assets exceeding over 70 billion under its

management and has the distinction of being accorded "AAA" rating consequently

for the past six years by Standard & Poor.

DEPARTMENTS IN ORGANISATION:

The various departments in the organization are:

The Human Resource Department

Investment Department

Customer Service and Operations Department

Information Technology Department

Strategy Department

Marketing Department.

PERFORMANCE OF HDFC

FINANCIAL PERFORMANCE

PRODUCT & SERVICES

INDIVIDUAL PRODUCTS

We at HDFC Standard Life realise that not everyone has the same kind of

needs. Keeping this in mind, we have a varied range of Products that you can

choose from to suit all your needs. These will help secure your future as well as the

future of your family.

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Protection Plans

You can protect your family against the loss of your income or the burden of a loan

in the event of your unfortunate demise, disability or sickness. These plans offer

valuable peace of mind at a small price. Our Protection range includes:

TERM ASSURANCE PLAN

LOAN COVER TERM ASSURANCE PLAN

HOME LOAN PROTECTION PLAN

Investment Plans

Pension Plans

Savings Plans

Health Plans

Group Products

Group Term Insurance:

HDFC Standard Life Insurance offers a Group Insurance scheme for

companies called 'Group Term Insurance. This product has been designed to offer

innovative features and a high degree of customization.

Gratuity Plan

The HDFC Gratuity Plan is an insurance policy, which offers you, as an

employer and gratuity scheme trustee, a new and flexible way to fund your gratuity

liability.

Development Insurance Plan:

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This product is well suited for the economically weaker sections of society and

caters specifically to their needs. It makes available life cover at affordable rates.

Communication strategies and media analysis

HDFC STANDARD LIFE INSURANCE success has been built on its consistent

focus on the customer and delivering on his/her needs. This includes several

initiatives, such as:

Developing flexible products that are based on consumer needs and insights.

Offering differentiated service to the customer in a manner that is most

Convenient to him/her-be it through the web, call centres, branches, etc.

Scientific risk management.

Investment strategy with a focus on safety, stability and returns are some of

the factors that have facilitated their growth.

Since its inception, HDFC STANDARD LIFE INSURANCE has invested in building a

meaningful brand in the mind of its customers. These efforts have borne fantastic

results, with the company enjoying total brand awareness scores of 92%, the highestamong private life insurers.

The Marketing function at HDFC STANDARD LIFE INSURANCE covers many

activities-

Brand and media management,

Channel support

Direct marketing

The Brand and Communications team is in charge of advertising, consumer

research, media planning & buying and Public Relations; that helps in developing

and nurturing HDFC STANDARD LIFE INSURANCE corporate identity while

effectively communicating its varied product offerings to the customer. Channel

marketing provides support to the sales force by providing streamlining the design

and development of collaterals and sales tools across distribution channels. The

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Direct Marketing team was set up to generate high quality leads for profitable

business. The team achieves this through target database acquisition and

communicating customized product information through e-mailers, telemarketing and

innovative direct mailers.

HDFC STANDARD Life Insurance has shifted its Rs.200 million media

planning and buying account from Initiative Media to Mindshare.

The main aim of the company is that they are looking for agencies, which can go

beyond tools and techniques in terms of rigorously using them, and implementing a

robust monitoring system (for efficiency in terms of planning and execution of the

plan devised). Also, they should have some expertise in handling the banking,

financial services and insurance category. The company also looks at the capability

to go beyond TV, outdoor and print.

HDFC MORE

Standard Life Insurance Company Ltd. is one of India's leading private

insurance companies, which offers a range of individual and group

insurance solutions. It is a joint venture between Housing Development

Finance Corporation Limited (HDFC Ltd.), India's leading housing finance

institution and a Group Company of the Standard Life, UK. HDFC as onMarch 31, 2007 holds 81.9 per cent of equity in the joint venture.

Our key strengths

Financial Expertise:As a joint venture of leading financial services groups,

HDFC Standard Life has the financial expertise required to manage your

long-term investments safely and efficiently.

Range of Solutions:We have a range of individual and group solutions,

which can be easily customised to specific needs. Our group solutions have

been designed to offer you complete flexibility combined with a low charging

structure.

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Promoters of HDFC Standard Life Insurance:

1. HDFC Limited

HDFC is Indias leading housing finance institution and has helped build

more than 23,00,000 houses since its incorporation in 1977. In Financial

Year 2003-04 its assets under management crossed Rs. 36,000 Cr. As at

March 31, 2004, outstanding deposits stood at Rs. 7,840 crores. The

depositor base now stands at around 1 million depositors.

Rated AAA by CRISIL and ICRA for the 10th consecutive year

Stable and experienced management

High service standards

Awarded The Economic Times Corporate Citizen of the year Award for

its long-standing commitment to community development.

Presented the Dream Home award for the best housing finance provider

in 2004 at the third Annual Outlook Money Awards.

Standard Life Group (Standard Life plc and its subsidiaries)

The Standard Life group has been looking after the financial needs of

customers for over 180 years. It currently has a customer base of around 7

million people who rely on the company for their insurance, pension,

investment, banking and health-care needs.

Its investment manager currently administers 125 billion in assets. It is a

leading pensions provider in the UK, and is rated by Standard & Poor's as

'strong' with a rating of A+ and as 'good' with a rating of A1

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by Moody's Standard Life was awarded the 'Best Pension Provider' in 2004,

2005 and 2006 at the Money Marketing Awards, and it was voted a 5 star

life and pensions provider at the Financial Adviser Service Awards for the

last 10 years running.

The '5 Star' accolade has also been awarded to Standard Life Investments

for the last 10 years, and to Standard Life Bank since its inception in 1998.

Standard Life Bank was awarded the 'Best Flexible Mortgage Lender' at the

Mortgage Magazine Awards in 2006

Incorporation: HDFCs Standard Life Insurance Company

Limited

The company was incorporated on 14th August 2000 under the name of

HDFC Standard Life Insurance Company Limited.

Our ambition from as far back as October 1995, was to be the first private

company to re-enter the life insurance market in India. On the 23rd of

October 2000, this ambition was realised when HDFC Standard Life was the

only life company to be granted a certificate of registration. HDFC are the

main shareholders in HDFC Standard Life, with 81.4%, while Standard Life

owns 18.6%.

Given Standard Life's existing investment in the HDFC Group, this is the

maximum investment allowed under current regulations. HDFC and

Standard Life have a long and close relationship built upon shared values

and trust. The ambition of HDFC Standard Life is to mirror the success ofthe parent companies and be the yardstick by which all other insurance

company's in India are measured.

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PRODUCTS

At HDFC Standard Life, we offer a bouquet of insurance solutions to meet

every need. We cater to both, individuals as well as to companies looking to

provide benefits to their employees. This section gives you details of all our

products. We have incorporated various downloadable forms and productdetails so that you can make an informed choice about buying a policy.

For individuals, we have a range of protection, investment, pension and

savings plans that assist and nurture dreams apart from providing

protection. You can choose from a range of products to suit your life-stage

and needs.

For organizations we have a host of customised solutions that range from

Group Term Insurance, Gratuity, Leave Encashment and Superannuation

Products. These affordable plans apart from providing long term value to the

employees help in enhancing goodwill of the company.

Individual Products

We at HDFC Standard Life realise that not everyone has the same kind of

needs. Keeping this in mind, we have a varied range of Products that you can

choose from to suit all your needs. These will help secure your future as well as

the future of your family.

Protection Plans

You can protect your family against the loss of your income or the burden

of a loan in the event of your unfortunate demise, disability or sickness.

These plans offer valuable peace of mind at a small price.

Our Protection range includes our Term Assurance Plan & Loan Cover Term

Assurance Plan.

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Investment Plans

Our Single Premium Whole Of Life plan is well suited to meet your long term

investment needs. We provide you with attractive long term returns through

regular bonuses.

Pension Plans

Our Pension Plans help you secure your financial independence even after

retirement. Our Pension range includes our Personal Pension Plan, Unit

Linked Pension, Unit Linked Pension Plus

Savings Plans

Our Savings Plans offer you flexible options to build savings for your future

needs such as buying a dream home or fulfilling your childrens immediate

and future needs. Our Savings range includes Endowment Assurance Plan,

Unit Linked Endowment, Unit Linked Endowment Plus, Money Back Plan,

Childrens Plan, Unit Linked Youngstar, Unit Linked Youngster Plus.

Group Products

One-stop shop for employee-benefit solutions

HDFC Standard Life has the most comprehensive list of products for

progressive employers who wish to provide the best and most innovative

employee benefit solutions to their employees. We offer different products

for different needs of employers ranging from term insurance plans for pure

protection to voluntary plans such as superannuation and leave

encashment. We now offer the following group products to our esteemed

corporate clients:

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Group Term Insurance

Group Variable Term Insurance

Group Unit-Linked Plan

An investment solution that provides funding vehicle to manage corpuseswith Gratuity, Defined Benefit or Defined Contribution Superannuation or

Leave Encashment schemes of your company

Also suitable for other employee benefit schemes such as salary saving

schemes and wealth management schemes

Social Products

Development Insurance Plan

Development Insurance plan is an insurance plan which provides life cover

to members of a Development Agency for a term of one year. On the death

of any member of the group insured during the year of cover, a lump sum is

paid to that members beneficiaries to help meet some of the immediate

financial needs following their loss.

Eligibility

Members of the development agency and their spouses with:

- Minimum age at the start of the policy 18 years last birthday

- Maximum age at the start of policy 50 years last birthday

Employees of the Development Agency are not eligible to join the group.

The group to be covered is only eligible if it contains more than 500

members.

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Premium Payments

The premium to be paid will be quoted per member in the group and will be the

same for all members of the group. The premium can only be paid by the

Development Agency as a single lump sum that includes all premiums for the

group to be covered. Cover will not start until the premium and all the memberinformation in our specified format has been received. The premium rate is Rs.

25 per Rs. 10,000 of lump sum, per member.

Benefits

On the death of each member covered by the policy during the year of cover a

lump sum equal to the sum assured will be paid to their beneficiaries or legal

heirs. Where the death is as a result of an accident, an additional lump sum willbe paid equal to half the sum assured. There are no benefits paid at the end of

the year of cover and there is no surrender value available at any time.

The role of the Development Agency

Due to the nature of the groups covered, HDFC Standard Life will be passing certain

administrative tasks onto the Development Agency. By passing on these tasks the

premium charged can be lower. These tasks would include:

Submission of member data in a specified computer format

Collection of premiums from group members

Recording changes in the details of group members

Disbursement of claim payments and the mortality rebate (if any) to group

members

These tasks would be in addition to the usual duties of a policyholder such as:

Payment of premiums

Reporting of claims

Keeping policy holder information up to date

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Training and support will be available to give guidance on how to complete the tasks

appropriately. Since these additional tasks will impose a burden on the Development

Agency, the Development Agency may charge a Rs. 10 administration fee to their

members.

Prohibition of rebates

Section 41 of the Insurance Act, 1938 states

No person shall allow or offer to allow, either directly or indirectly, as an inducement to

any person to take out or renew or continue an insurance in respect of any kind of risk

relating to lives or property in India, any rebate of the whole or part of the commission

payable or any rebate of the premium shown on the policy, nor shall any person taking

out or renewing or continuing a policy accept any rebate, except such rebate as may

be allowed in accordance with the published prospectus or tables of the insurer If any

person fails to comply with sub regulation (previous point) above, he shall be liable to

payment of a fine which may extend to rupees five hundred

Tax Benefits

INCOME TAX SECTION GROSS ANNUAL SALARY HOW MUCH TAX CAN

YOU SAVE? HDFC STANDARD LIFE PLANS

Sec. 80C Across All income Slabs. Upto Rs. 33,990 saved on investment of Rs.

1, 00,000. All the life insurance plans.

Sec. 80 CCC Across all income slabs. Upto Rs. 33,990 saved on Investment of

Rs.1, 00,000. All the pension plans.

Sec. 80 D* across all income slabs. Upto Rs. 3,399 saved on Investment of Rs.

10,000. All the health insurance riders available with the conventional plans.

TOTAL SAVINGS POSSIBLE ** Rs. 37,389

Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec. 80 D,

calculated for a male with gross annual income exceeding Rs. 10,00,000.

Sec. 10 (10) D under Sec. 10(10D), the benefits you receive are completely tax-

free, subject to the conditions laid down therein.

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3.RESEARCH METHODOLOGY

According to Clifford woody research comprises defining and redefining problems,

formulating hypotheses solution, collecting and evaluating data, making deduction

and reaching conclusion and at last carefully testing the conclusion to determine

weather they fit the formulating hypothesis.

Research in a common parlance refers to a search for knowledge. One can also

define search as a scientific and systematic search for pertinent information on a

specific topic. In fact research is an art of scientific investigation.

Some people consider research as a movement, a movement from known to

unknown; it is actually a voyage of discovery.

This inquisitiveness is the mother of all knowledge and the method, which man

employs for obtaining the knowledge of whatever the unknown can be termed as

research.

3.1 Title of the study:

Recruitment & selection Policy

3.2 Duration of the project:

Summer training report from HDFC STANDARD LIFE INSURANCE for 45 days.

Objective of study:

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How does right recruitment process helps in creating overall efficiency, cost

reduction, on time delivery with reference to external customer.

To collect the findings, information & analyze to draw conclusion of

recruitment process.

To explain the documentation used at the various stages of the recruitment

& Selection process.

To involve employees in creating an environment of openness, trust, fun &

pride.

To highlight the area where recruitment and selection programs needs

improvement.

Is the current recruitment process in line with the employees future career

planning and his potential?

Developing human resources in consonance with broader corporate horizon

and long range vision of the organization.

TYPE OF RESEARCH

1. Exploratory research is conducted with the help of using an interview

and questionnaire schedule for this project. In this type of research, the

researcher has to contact the person directly to know the available

information and analyze these to make a critical evaluation. The facts or

information required to analyze the data was available in interview

schedule. This was one of the main sources for the project.

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3.5 SAMPLE SIZE AND METHOD OF SELECTING SAMPLE

UNIVERSE- JAIPUR

The sample collected in finite population of ICICI Prudential

SAMPLE SIZE: -50

Research design is a model of master plan for gathering formal information. It calls

for certain specification of methods and procedures for obtaining the required

information.

PRIMERY SOURCES OF INFORMATION

Officials and sales executives of SBI Mutual fund.

Official and executives of SBI

Discussion about mutual funds with existing and new investors

SECONDARY SOURCES OF INFORMATION

Offer documents of SBI and ICICI Prudential Mutual Funds.

Mutual Fund related magazines like Mutual Fund Review, Mutual Fund

Insight by value researchers, Outlook Money.

Fact Sheets of SBI Mutual Fund and ICICI Prudential Mutual Fund

Web sites, mainly www.mutualfundsindia.com, sbimf.com

www.valueresearchersonline.com, www.indiainfoline.com.

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3.6 SCOPE OF STUDY

RECRUITMENT AND SELECTION

RECRUITMENT

Recruitment is the process concerned with the identification of sources from

where the personnel can be employed and motivating them to offer themselves for

employment.

Weather and Davis have defined this as follows; Recruitment is the process offinding and attracting capable applicants for employment. The Process begins

when new recruits are sought and ends when their applicants are submitted. The

result is Sa pool of applicants from which new employees are selected.

Recruitment means to estimate the available vacancies and to make suitable

arrangements for their selection and appointment. Recruitment is understood as the

process of searching for and obtaining applicants for the jobs, from among whom the

right people can be selected.

A formal definition states, It is the process of finding and attracting capable

applicants for the employment. The process begins when new recruits are sought

and ends when their applicants are submitted. The result is a pool of applicants from

which new employees are selected. In this, the available vacancies are given wide

publicity and suitable candidates are encouraged to submit applications so as to

have a pool of eligible candidates for scientific selection.

In recruitment, information is collected from interested candidates. For this different

source such as newspaper advertisement, employment exchanges, internal

promotion, etc.are used.

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In the recruitment, a pool of eligible and interested candidates is created for

selection of most suitable candidates. Recruitment represents the first contact that a

company makes with potential employees

Definition:

According to EDWIN FLIPPO,Recruitment is the process of searching forprospective employees and stimulating them to apply for jobs in the organization.

Lord has defined, Recruitment is a form of competition. Just as corporations

compete to develop, manufacture, and market the best product or service, so they

must also compete to identify, attract and hire the most qualified people.

Recruitment is a business, and it is big business.

Thus, recruitment process is concerned with the identification of possible sources of

human resource supply and tapping those sources.

1.2 Need for recruitment:

The need for recruitment may be due to the following reasons / situation:

a. Vacancies due to promotions, transfer, retirement, termination, permanent

disability, death and labour turnover.b. Creation of new vacancies due to the growth, expansion and diversification of

business activities of an enterprise. In addition, new vacancies are possible

due to job specification.

Purpose and importance of Recruitment:

Determine the present and future requirements of the organization on

conjunction with its personnel-planning and job analysis activities.

Increase the pool of job candidates at minimum cost.

Help increase the success rate of the selection process by reducing the

number of visibly under qualified or overqualified job applicants.

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Help reduce the probability that job applicants, once recruited and selected,

will leave the organization only after a short period of time.

Meet the organizations legal and social obligations regarding the composition

of its work force.

Begin identifying and preparing potential job applicants who will beappropriate candidates.

Increase organizational and individual effectiveness in the short term and long

term.

Evaluate the effectiveness of various recruiting techniques and sources for all

types of job applicants.

Recruitment is a positive function in which publicity is given to the jobs available in

the organization and interested candidates are encouraged to submit applications for

the purpose of selection.

Recruitment represents the first contact that a company makes with potential

employees. It is through recruitment that many individuals will come to know a

company, and eventually decided whether they wish to work for it. A well-planned

and well-managed recruiting effort will result in high quality applicants, whereas, ahaphazard and piecemeal efforts will result in mediocre ones.

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CENTRALISED V/s DECENTRALISED RECRUITMENT

Recruitment practices vary from one organization to another. Some

organizations like commercial banks resort to centralized recruitment while some

organizations like the Indian Railway resort to decentralized recruitment practices.

Personnel department at the central office performs all the functions of recruitment in

case of centralised recruitment and personnel departments at unit level/zonal level

perform all the functions of recruitment concerning to the jobs of the respective unit

or zone.

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RECRUITMENT PROCESS:

Steps in recruitment of Insurance Agents

Approach to the likely person

Appointment as per condition

Discuss the topic

Give the documents which includes:-

1. Prospectus of the company

2. Brochure

3. Companys plan

4. Questionnaire

Collect the document after its completion

Forward it to project manager

Feed it in the computer as the database

Follow up as per conditions

Modes of Contact

Personal Contacts

References

Phone Calls

Guidance as per Unit Manager

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GOALS OF RECRUITMENT

To attract highly qualified individuals.

To provide an equal opportunity for potential candidates to apply for

vacancies.

Sources of Recruitment

SOURCES OF MANAGERIAL RECRUITMENT

INTERNAL SOURCES EXTERNAL SOURCES

1) Promotion 1) Campus recruitment

2) Transfers 2) Press advertisement

3) Internal notification 3) Management consultancy service

(Advertisement) & private employment exchanges

4) Retirement 4) Deputation of personnel or

transfer from one enterprise

to another

5) Recall 5) Management training schemes

6) Former employees 6) Walk-ins, write-ins, talk-ins

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The sources of recruitment can be broadly categorized into internal and external

sources-

Internal Recruitment Internal recruitment seeks applicants for positions

from within the company. The various internal sources include-:

Promotions and Transfers

Promotion is an effective means using job posting and personnel records.

Job posting requires notifying vacant positions by posting notices, circulating

publications or announcing at staff meetings and inviting employees to

apply. Personnel records help discover employees who are doing jobs below

their educational qualifications or skill levels.

Employee referrals-

Employees can develop good prospects for their families and friends by

acquainting them with the advantages of a job with the company, furnishing

them with introduction and encouraging them to apply. This is a very

effective means as many qualified people can be reached at a very low cost

to the company.

Dependents of deceased employees-

Usually, banks follow this policy. If an employee dies, his / her spouse or

son or daughter is recruited in their place. This is usually an effective way to

fulfill social obligation and create goodwill.

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Recalls : -

When management faces a problem, which can be solved only by a

manager who has proceeded on long leave, it may de decided to recall that

persons after the problem is solved, his leave may be extended.

Retirements : -

At times, management may not find suitable candidates in place of the one

who had retired, after meritorious service. Under the circumstances,

management may decide to call retired managers with new extension.

Internal notification (advertisement) : -

Sometimes, management issues an internal notification for the benefit of

existing employees. Most employees know from their own experience about

the requirement of the job and what sort of person the company is looking

for.

External Recruitment:

External recruitment seeks applicants for positions from sourcesoutside the company. They have outnumbered the internal methods.

The various external sources include

Professional or Trade Associations :-

Many associations provide placement service to its members. It consists of

compiling job seekers lists and providing access to members during regional or

national conventions. Also, the

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Advertisements:-

It is a popular method of seeking recruits, as many recruiters prefer advertisements

because of their wide reach. Want ads describe the job benefits, identify the

employer and tell those interested how to apply. Newspaper is the most common

medium but for highly specialized recruits, advertisements may be placed inprofessional or business journals.

Employment Exchanges:-

Employment Exchanges have been set up all over the country in

deference to the provision of the Employment Exchanges (Compulsory

Notification of Vacancies) Act, 1959. The Act applies to all industrial

establishments having 25 workers or more each. The Act requires all the

industrial establishments to notify the vacancies before they are filled.

Campus Recruitments:-

Colleges, universities, research laboratories, sports fields

and institutes are fertile ground for recruiters, particularly the institutes.

Campus Recruitment is going global with companies like HLL, Citibank,

HCL-HP, ANZ Grindlays, L&T, Motorola and Reliance looking for global

markets. Some companies recruit a given number of candidates from these

institutes every year.

SELECTION

Selection can be conceptualized in terms of either choosing the fit candidates, or

rejecting the unfit candidates, or a combination of both.

Selection involves both because it picks up the fits and rejects the unfits. In fact, in

Indian context, there are more candidates who are rejected than those who are

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selected in most of the selected processes. Therefore, sometimes, it is called a

negative process in contrast to positive program of recruitment.

Stone has given a formal definition; Selection is the process of differentiating

between applicants in order to identify (and hire) those with a greater likelihood of

success in a job

Difference between Recruitment and Selection

At this stage, it is worthwhile to understand difference between recruitment and

selection as both these terms are often used together or sometimes

interchangeably.

Flippo described in the following statement: Recruitment is a process of

searching for prospective employees and stimulating and encouraging them to

apply for jobs in an organization. It is often termed positive in that it stimulates

people to apply for jobs to increase the hiring ratio, i.e., the number of applicants

for a job. Selection, on the other hand, tends to be negative because it rejects a

good number of those who apply, leaving only the best to be hired.

Difference (Recruitment and Selection)

1.) Recruitment is the process of searching for prospective candidates and

motivating them to apply for job in the organisation

Whereas, selection is a process of choosing most suitable candidates out of those,

who are interested and also qualified for job.

2.) In the recruitment process, vacancies available are finalized, publicity is given to

them and applications are collected from interested candidates.

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In the selection process, available applications are scrutinized. Tests, interview and

medical examination are conducted in order to select most suitable candidates.

3.) In recruitment the purpose is to attract maximum numbers of suitable and

interested candidates through applications.

In selection process the purpose is that the best candidate out of those qualified and

interested in the appointment.

4.) Recruitment is prior to selection. It creates proper base for actual selection.

Selection is next to recruitment. It is out of candidates available/interested.

5.) Recruitment is the positive function in which interested candidates are

encouraged to submit application.

Selection is a negative function in which unsuitable candidates are eliminated and

the best one is selected.

6.) Recruitment is the short process. In recruitment publicity is given to vacancies

and applications are collected from different sources

Selection is a lengthy process. It involves scrutiny of applications, giving tests,

arranging interviews and medical examination.

7.) In recruitment services of expert is not required

Whereas in selection, services of expert is required

8.) Recruitment is not costly. Expenditure is required mainly for advertising the

posts. Selection is a costly activity, as expenditure is needed for testing candidates

and conduct of interviews.

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GOALS OF SELECTION

To systematically collect information about to meet the requirements of the

advertised position.

To select a candidate that will be successful in performing the tasks and

meeting the responsibilities of the position.

To engage in hiring activities that will result in eliminating the under

utilization of women and minorities in particular departments.

PLACEMENT AND INDUCTION

After a candidate is selected for employment, he is placed on the job.

Initially, the placement may be probation, the period of which may range

from six months to two years. After successful completion of the probation

period, the candidate may be offered permanent employment.

1. When a new employee joins an organization, he is a stranger to the

organization and vice versa. He may feel insecure, shy, and nervous in the strange

situation. He may have anxiety because of lack of adequate information about the

job, work procedures, organizational policies and practices, etc. In such a case,

induction is needed through which relevant information can be provided; he is

introduced to old employees and to work procedures.

2. Effective induction can minimize the impact of reality shock some new

employees may undergo. Often, freshers join the organization with very high

expectations which may be far beyond the reality. When they come across with

reality, they often feel shocked. By proper induction, the new comers can be made

to understand the reality of the situation.

3.7 LIMITATION OF STUDY

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Any research in any field topic gives some new results, discovering new areas etc.

but there are always some limitations thereof.

The data collected is totally dependent on respondents views, which could be

bias in nature.

Sometimes respondents do not give a response or give partial response. It is

called non response error. The reason may be lack of knowledge or

unwillingness to answer.

The sample size is small and it may not actually represent the whole

population.

During the survey I came across unfavorable weather conditions like

scorching heat and dust storm.

There is limited time available each day and lot of tasks have to completed in

a day like preparing reports, conducting surveys, spend time at the office to

gain knowledge, etc.

The study was conducted in the urban areas and it cannot be applied to the

rural areas because the tastes and preferences of people of rural and urban

areas differ vastly.

The answers given by the respondents are not always correct and may be

misleading.

It is very time consuming to go door to door in order to conduct a survey of

various homes and find their views and study their buying behavior.

Sometimes it becomes very difficult to convince people as many of them are

not at all aware of Saras products and some are very stubborn. It

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4. FACTS & FINDINGS

Insurance is the instrument of Security, saving and peace of mind.It provide several

benefits by paying a small amount of premium to an insurance company a

Safeguards oneself and one's family for future requiremen

Peace of mind-in case of financial loss. Encourage saving.

Tax rebate.

Protection from the claim made by creditors.

Security against a personal loan, housing loan or other types of loan.

Provide a protection cover to industries, agriculture, women and child.

Insurance Regulatory Development Authority :

Life insurance is universally acknowledged to be an institution which

eliminates 'risk' and provides the timely aid to the family in the unfortunate

event of death of the breadwinner.

Life Insurance is a contract for payment of a sum of money to the person

assured (or nominee) on the happening of the event insured against. The

contract provides for the payment of premium periodically to the Insurance

company by the assured. The contract provides for the payment of an amount

on the date of maturity or at specified dates at periodic intervals or at

unfortunate death, if it occurs earlier.

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Some important findings of life Insurance as:

Protection: Life Insurance guarantees full protection against risk of death of the

assured. In case of death, full sum assured is payable.

Long Term Saving: Life insurance encourages long term saving. By paying a small

premium in easy installments for a long period a handsome saving can be

achieved.

Liquidity: Loan can be obtained against a policy assured whenever required.

Tax Profit: Tax

Documents

Comaprative Analaysis of LIC With HDFC