Executive Summary Satty Final

8/8/2019 Executive Summary Satty Final

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A study on Investors education in respect of modern investment tools06119103909

CONTENTS

Topic pageno.

1. Executive summary

2. Chapter 1 Introduction

3. Chapter 2 Companys profile

4. Chapter 3 Review of literature

5. Chapter 4 Research methodology and design

6. Chapter 5 Detailed study of report

7. Chapter 6 Data analysis and representation

8. Chapter 7 Major findings

9. Chapter 8 Conclusion and recommendations

10. References

11. Annexure

LIST OF TABLES

Gitarattan international business school


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TABLE

NUMBERDESCRIPTIONS OF TABLE PAGE

NUMBER

1 Table on occupation of individuals

2 Table on income level

3 Plans for investment

4 Investment preferences

5 Investment goals

6 Preferences for investment products



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EXECUTIVE SUMMARY

PROJECT TITLE: ASTUDYON INVESTORS EDUCATION

IN RESPECT OF MODERN INVESTMENT ALTERNATIVES

I have successfully completed my seven weeks internship at Niveshak

Mpowered Delhi for the assigned project titled investors education in respect

of modern investment alternatives.Mr. Anubhav Talwar (Regional Head), was

my project guide who guided me how to carry on with the project.

Increased levels of wealth created by the individuals and brighter economic

prospects for the future have substantially increased the demand for sound

professional advice for investments as well as on the part of investors to educate

their on selves and be their own financial planners. There is an increased need felt

by the investors to know all about various types of wealth creation products.

The present study takes a step towards investors education with respect of

modern investment products. The central objective of the study was to make

investors aware of their rights and to bring to the kind notice of investors the

benefits of investing in different financial assets and choose between them.

Investor provides the funds (business capital) which the company uses to operate.

With no investors there is no business. The different types of investment products

available are shares, fixed deposits, bonds, NSC, mutual funds, insurance

products, retirement products, etc..

A survey was conducted to collect information about the preferences of thecustomer. The sample size of the survey was 50. A questionnaire was filled from

the people of different age groups and occupations.



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CHAPTER 1 INTRODUCTION

Investing in various types of assets is an interesting activity that attracts people

from all walks of life irrespective of their occupation, economic status, education,

and family background. When a person has more money than he requires for

current consumption, he would be coined as a potential investor. The investor

who is having extra cash could invest it in securities or in any other assets like

gold or real estate or could simply deposit it in his bank account. The companies

that have extra income may like to invest their money in the extension of the

existing firm or undertake new venture. All these activities are termed as

investment. Numerous avenues of investment are available today. The two key

aspects of any investment are time and risk. The sacrifice takes place now and is

certain. The benefit is expected in the future and tends to be uncertain. In someinvestments (like government bonds) the time element is the dominant attribute. I

other investments (like stock options) the risk element is the dominant attribute.

In yet other investments (like equity shares) both time and risk are important.

Almost every investor holds a portfolio of investments. The portfolio is likely to

comprise financial assets (like bank deposits, bonds, stocks, and so on) and real

assets (like motorcycle, house and so on). The portfolio may be the result of a

series of haphazard decisions or may be the result of deliberate and careful

planning. The economic well being of an investor depends significantly on how

wisely or foolishly one invests.

As an investor one have a wide array of investment alternatives available.which

may be non-marketable financial assets, equity shares, bonds, money market

instruments, mutual funds, insurance, real estate, precious objects, financial

derivatives.

Therefore, an investor has to exercise great care while making investment

decisions. Investors, particularly small investors, are always vulnerable to the

fluctuations taking place in the capital market. If there is efficient capital market,

then the prices of securities are adjusted to any type of price sensitive information.

But the securities markets are always not efficient. In India, SEBI, in view of its

basic objectives, has taken several steps to protect the rights of investors in

general. A well-knit education plan has been launched, an office of securities



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ombudsman has been created and comprehensive guidelines have been

issued to curb unfair trade practices. An investor should be aware of all these

invisible hands protecting him.

Investors protection demands that the potential investor is provided with all the

information which is necessary for him to take a decision after proper assessment

of the risks and returns of the proposed investments. Adequacy of disclosure is,

therefore, the corner stone of a healthy capital market.

An ideal investor generally plans for a longer time horizon, his holding period

may be from one year to few years, assumes moderate risk, likes to have moderate

rate of return associated with limited risk, considers fundamental factors and

evaluates the performance of the company regularly, uses his own funds and

avoids borrowed funds.

Study on investors education in respect of modern investment tools will

include investors protection, investors grievances, investors education, and

unfair trade practices. Sufficient references to SEBIs guidelines and regulations

have been made where ever necessary. And also the various investment

alternativesavailable to an individual investor with particular reference to modern

investment tools.

CHAPTER 2 COMPANYS PROFILE

(Niveshak Mpowered Pvt Ltd, SPA Capital Services Ltd)

Niveshak Empowerment Programme is a comprehensive financial advisory



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platform that helps agents and investors achieve their goals with a range of

training and self education courses.

NEP helps agents serve their clients better and take charge of their business.

NFAP Professional provides agents with market insights, client and money

management tips and sophisticated tools to manage their clients and their

investments. NEP helps investors by providing unique financial insights and take

charge of their investments.

Power Niveshak helps investors understand the marketplace by providing

information and imparting knowledge on various funds, bullion market and

relevant news that is important to their investments.

Niveshak is a Company incorporated under the Indian Companies Act 1956.

Niveshak is created solely with a view to provide a platform for the Investors to

enable them to take informed decision for investing their hard earned money, in

seeking this goal, Niveshak also endeavors to develop a qualified and well-

informed cadre of Financial Advisors and Distributors by empowering the

practicing Financial Advisors/Distributors with better/relevant knowledge/skills

and by training the young college and B-School graduates with adequate

knowledge/skills.

A unique Investor Education Program has been devised for helping the investor

understand the intricacies of the savings and investments. The program also

encompasses in it sufficient provision to draw sufficient learning from the

feedback received from the investors as to what is the significance of learning and

knowledge on the investment decisions of the common investors. Niveshak

Associates would help the investors in understanding their risk profile so that they

can understand what type of savings/investment options or securities and mutual

funds they should invest within their overall risk profile.



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Niveshak is an initiative of SPA Capital Services Ltd. and Acsys Software

(India) Pvt. Ltd.

The group companies are:

SPA capital services Ltd.

Acsys software (India) Pvt Ltd.

SPA Group promoted in 1995, by a team of financial professionals, provides

value added financial services like corporate finance and wealth management

services to Indian companies and HNIs. SPA Group has established itself as one

of India's leading financial advisory house, offering various financial services like

securities broking, insurance broking, corporate finance, merchant banking,

financial advisory, risk management and wealth management.

SPA Capital Services Ltd. is a flagship company of SPA Group, engaged in

advisory and distribution services of mutual funds & insurance and is ranked

amongst the top 5 financial intermediaries of the country. The company has a

distribution network of over 200 sub-brokers across India being serviced by its 58

branches. The company has mobilized over Rs. 5 lac crores for various mutualfunds during the last 10 years and is currently having AUM over Rs.20, 000

crores with hundreds of satisfied customers.

AcsysSoftware(India)Pvt.Ltd

is a leading Technology and Software Solution Provider in the niche vertical of

the Mutual Fund Industry both in India and abroad. Its Software products and

services covering many application areas are termed "Best of Brand" services

within the Indian Fund Industry. Acsys designs software solutions and products to

keep pace with today's changing market place. Its software applications and

products, support all participants in the fund industry, be it the Fund House, the

Distributor and/or Investor.



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In addition, Acsys has a large pool of in-house expertise to continually develop

appropriate and advanced technology requirements to the financial services

market in general and Fund industry in particular

Profile

Acsys Software (India) Pvt. Ltd., incorporated in 1996, was originally the

software division of Computer Age Management Services (P) Ltd., (CAMS). It

was hived off as a joint venture in association with Alliance Capital LLP of the

USA. Currently, Acsys Software is fully owned by the original Indian promoters

and is an affiliate Company to CAMS.

CAMS are India's largest Transfer Agency for Open Ended Funds dominating

more than 60% of the market. CAMS offer Outsourced Transaction Processing,

Customer Care, and Fund Accounting and related Transfer Agency Services.

Acsys Software products for Asset Management Companies, Distributors and

related entities come with the following advantages:

Substantial knowledge of business and domain of the Mutual Fund

Industry. It understands the needs easily and is able to harness the

software solutions for new products and services faster.

Its Software Products and services are put through extreme process

conditions through its stake-holder's businesses.

It operates in a dynamic environment dictated by enormous growth in the

Indian Mutual Fund Industry in a very short span.

Demonstrated capabilities overseas, through offshore development, which

resulted in an entity migrating from a multiple database and legacy

systems environment to a "state of the art" open architecture software

solution.

Multi-currency functionality to include Euro compliancy



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Acsys has a library of core products, which meets the software requirements of

Mutual Fund Asset Management Companies, Fund Distributors and other

intermediaries. All its products are designed and customized using Client Server

Architecture for Oracle Databases with Power Builder and other Internet enabled

front ends, using JAVA, XML and other revolutionary tools for 24/7 web

delivery. Acsys Software has production facilities at Chennai, India and provides

client service from Luxembourg for Europe.

CHAPTER 3 REVIEW OF LITERATURE

BOOKS

1. BHALLA.V.K-

INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT



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Investment management: security analysis and portfolio management describes

techniques, vehicles, and strategies for planning, implementation and overseeing

the optimal allocation of funds of an investor or an institution in the changing

investment environment.

From the above mentioned book investment tools like mutual funds were taken.

2. RANGANATHAN. M

MADHUMATHI. R

INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT: 4TH

EDITION

This book is a comprehensive coverage of theory, tools and techniques relating to

investment.

From the above mentioned book, investment avenues like KVPs, NSC, and PPF

were taken.

3. CHANDRA PRASANA.

INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT

This book seeks to capture the essence of modern developments in investments,

provided a guided tour of the so called complex tool of investments and seeks to

improve the skills in managing investment.

From the above mentioned book, characteristics of different investment

alternatives available to investors were taken.

4. AVADHANI V.A

INVESTMENT MANAGEMENT

This book provided with the basic of studying investment with high practical bias.

INTERNET SITES



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1) http://www.sebi.gov.in/

The above mentioned website provided with the whole set of data

presently required. Particular attention was made to investors

association. so as to understand their grievances, problems, rights and

duties.

Present regulations regarding investors were also made through this site.

2) http://www.rbi.org.in/home.aspx

The Reserve Bank of India performs this function under the guidance of

Board for Financial Supervision (BFS). The Board was constituted in

November 1994 as a committee of the Central Board of Directors of the

Reserve Bank of India.

From the above mentioned site financial education regarding common

people i.e investors was taken to account.

3) http://www.irda.gov.in/Defaulthome.aspx?page=H1

IRDA is the regulatory authority for regulating the insurance sector in

India.From the above mentioned site details regarding the insurance

products were taken.

4) http://www.mutualfundsindia.com/

This site provided the details and basic knowledge regarding the investor

investing scenario which formed the basis for analytical purpose.

Working of mutual funds and the types of mutual funds were taken from

this site.

5) http://www.morganstanleyindividual.com/investmentproducts/

Whether one wants one investment-related product for now or whether

want several, for diversification purposes, this site offer a variety ofchoices to fit needs. So from this site modern investment tools were taken

which in the end formed the basis for analysis.

MAGAZINES

1. CORPORATE INDIA- VOL-3 ISSUE 13.

http://www.sebi.gov.in/http://www.rbi.org.in/home.aspxhttp://www.irda.gov.in/Defaulthome.aspx?page=H1http://www.mutualfundsindia.com/http://www.morganstanleyindividual.com/investmentproducts/http://www.rbi.org.in/home.aspxhttp://www.irda.gov.in/Defaulthome.aspx?page=H1http://www.mutualfundsindia.com/http://www.morganstanleyindividual.com/investmentproducts/http://www.sebi.gov.in/


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This magazine deals with the current happening in the corporate

world. And covers whole lot of materials ranging from marketing, art,

human resource to finance.

This September issue helped me out in investment analysis.

2. INVESTORS INDIA- AUGUST ISSUE

This particular magazine of BAJAJ CAPITAL PUBLICATION deals

with investors, providing them adequate knowledge while investing. It

helps in wealth creation.

This particular magazine helped a lot as it provided with investment

concept and trend, life insurance- pick of the month, and portfolio

investment.

CHAPTER 4 RESEARCH METHODOLOGY AND

DESIGN

The study, through causal research aims at measuring the customers preference

for different type of investment options available on the basis of various

parameters based on customers response in Delhi and NCR.

Methods adopted for surveys:

Primary Research

Field Survey Method- Targeted people above 21 years of age & having

income more than 2 lacs were asked to fill the questionnaire on for customers

perception on investment.

Personal Presentation technique- Respondents were given 30 min

presentation to make them aware about various modern investment avenues,which they look for while investing their funds.

Secondary Research

Information on ULIP, Mutual Funds, Fixed Deposits,KVPs, NSC and PPF were

collected from books and study material provided by the company and also books



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like IC-33, Internet, magazines like Outlook Money and newspapers like

Economic Times and Financial Times.

The survey process involved two phases: First phase included identification and

selection of the target clients to be studied and to determine the parameters onwhich respondents will justify their preferences. The audience were targeted and

analyzed basically on the basis of important parameters: Age, income and

Occupations. Demographical information was also taken in order to know the

investment patterns according to the location, age, gender etc. A questionnaire

was designed to collect the needed information from the respondents.

In the second phase data was collected through questionnaire from 60 respondents

within Delhi and NCR. The responses that were generated during this exercise

were uploaded in the specially designed software by the company which use to

categorize investors as conservative, moderate or aggressive also these

responses were converted in the form of percentages to have a comparative

outlook, as the numbers itself cannot explain the true picture.

III. METHODOLOGY DATA COLLECTED

Methodology adopted:

The method applied in this project is stated as follows:

Analysing the potential investors.

Developing the questionnaire

Conducting customer survey

Analysing the primary data collected and interpreting the data

Collecting facts and figures

Uploading the informations

Procedure:

The procedure that was followed can be enlisted as:



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Reading about the various investment products and avenues.

Deciding on the objective of study

Developing survey instruments

Conducting personal presentation for different age-groups, gender,

monthly income and occupation

Analyzing the data collected

The first part of the research consisted of secondary data search from the

following sources: websites, books, journals, newspaper articles. For the

conclusive research, questionnaires were developed on the basis of secondary data

to gather information on the research objective.

The final draft of the questionnaire was then prepared on the basis of the

observations from the pilot study. These were then finally filled by 60

consumers, for the conclusive study.

Process adopted:

The survey process involved two phases: First phase included identification and

selection of the target clients to be studied and to determine the parameters on

which respondents will justify their preferences. The audience were targeted and

analyzed basically on the basis of three important parameters: Age, Occupations

and Income levels. Demographical information was also taken in order to know

the investment patterns according to the age, gender etc. A questionnaire was

designed to collect the needed information from the respondents. (Annexure)

In the second phase data was collected through questionnaire from respondents

within DELHI- NCR region. The responses that were generated during this

exercise were converted in the form of percentages to have a comparative

outlook. These percentages were then represented through the simple tools like

bar graphs and pie charts.

Sampling Plan:



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Elements: The target clients of the study included the general population above

The age of 21 years

Sample size: 60 samples were selected from the target population across various

Categories like age, gender, income, occupation

RESEARCH DESIGN

Exploratory research often relies on secondary research such as reviewing

available literature and/or data, or qualitative approaches such as informal

discussions with consumers, employees, management or competitors, and more

formal approaches through in-depth interviews, focus groups, projective methods,

case studies or pilot studies. The Internet allows for research methods that are

more interactive in nature.

The results of exploratory research are not usually useful for decision-making by

themselves, but they can provide significant insight into a given situation.

Although the results of qualitative research can give some indication as to the

"why", "how" and "when" something occurs, it cannot tell us "how often" or "how

many."



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CHAPTER 5 I NVESTORS EDUCATION IN THELIGHT OF MODERN INVESTMENT TOOLS

(A detailed study)

Study will comprise of:

Part1: Investors protection, grievances, and education.

Part2: Unfair trade practices

Part3: UTI move towards investors education

Part4: Investment alternatives(modern alternatives)



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PART 1

INVESTORS PROTECTION

One of the objectives of SEBI is to provide a degree of protection to the investors

and to safe guard their rights and that there is steady flow of savings into the

market and to promote the development of and to regulate securities market.

The investor should be protected not only against the frauds and cheating but also

against the losses arising out of the unfair trade practices. Such practices may

include deliberate mis-statement of purchase or sale price by a broker; practices of

manipulation of prices by market rigging, insider trading, etc. the idea of investor

protection requires that the stock market is properly regulated and supervised to

ensure a fair play by the operating agencies. It also includes provisions of

adequate, accurate and relevant information to enable the investors to make

prudent investment decisions.

There are many sources of information available to a prospective investor, ofwhich the most important are:

i. The offer document,

ii. Advertisement through various media,

iii. Current market quotations in case of existing listed companies,

iv. News items and articles in financial dailies and magazines,

v. Research reports, and

vi. Advice from share brokers, friends and market gossips etc.

In order to protect the interest of the investors, SEBI has issued a number of

guidelines, rules and regulations for the supervision of the operations of merchant

bankers, stock exchanges, stock brokers, and other related agencies.



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Under section 11A of the SEBI act, 1992, SEBI, for the protection of investors,

may:

i. Specify the manner in which matters relating to issue of capital, transfer of

securities and other matters shall be disclosed by the companies.

ii. Prohibit any company from issuing prospectus, any offer document or

advertisement for issue of securities.

iii. Specify the requirements for listing and transfer of securities.

SEBI is empowered to take any of the following measures in the interest of

investors:

i. Suspend the trading of any security

ii. Prohibit any person associated with the securities market to buy, sell or

deal in securities.

iii. Make an enquiry in the interest of investors.

SEBI amends Disclosure and Investor Protection (DIP) guidelines

Securities and Exchange Board of India (SEBI) has amended the Disclosure and

Investor Protection (DIP) guidelines on 30th April 2007, as follows:

1) Grading of all Initial Public Offerings (IPO) made mandatory. The grading

will be applicable to all IPOs for which draft offer documents are filed withSEBI after April 30, 2007;

2) Existing practices followed by SEBI regarding processing of draft offer

documents incorporated in the DIP guidelines;

3) Companies having listing history of one year or more, only to be allowed to

make Qualified Institutions Placement(QIP);

4) Companies having listing history of less than six months to be enabled To

make preferential allotment, subject to certain conditions;

5) More clarity on provisions relating to minimum promoters contribution for

the purpose of public issues.



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Securities and Exchange Board of India (SEBI) has amended the SEBI

(Disclosure and Investor Protection) Guidelines, 2000 vide circular dated

November 29, 2007. The highlights of the amendments are:

i. Quoting of PAN in application forms for public/ rights issues has been

made mandatory, irrespective of the value of application.

ii. Companies making public issues are permitted to issue securities to retail

individual investors / retail individual shareholders at a discounted price,

provided that such discount does not exceed 10% of the price at which

securities are issued to other categories of public. For the purpose, ?retail

individual shareholder? has been defined to mean a shareholder (i) whose

shareholding is of value not exceeding Rs. 1,00,000/- as on the day

immediately preceding the record date, and (ii) who makes application or

bids in a public issue for value not exceeding Rs 1,00,000/-.

iii. Application by shareholders of listed companies under the reserved quota

has been restricted to retail individual shareholders.

It is explicit that the enactments like Companies Act, 1956, Securities Contracts

(Regulation) Act, 1956 and SEBI Act, 1992 contain provisions to protect the

interests of investors. However, they have not served the purpose fully. Hence,

the investors must be aware of the measures available for their protection.

On their part, the companies too have taken the investors problem seriously so

much so that they have changed their earlier stand of having a centralized

department for investors problems in favor of giving the whole portfolio to

outside specialized agencies as transfer agents. There is a growing awareness

now that the handling of investors problems is aspecialized subject and if theyfail to deliver efficient services, their chances to mobilize fresh resources by way

of public rights issue may be jeopardized and eventually losing sympathy of

investors.

Both SEBI and stock exchanges have successfully launched a separate department

for this kind of work. They have started publishing names of companies which

have largest number of investors complaints and insist on solving the investors



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problems with speed. A beginning made in this field in the last two or three years

is now gaining momentum.

a. INVESTORS SERVICE CENTRE

Companies with lakhs of shareholders / debentureholders have opened

permanent investors service centres for attending to problems like change of

address, non-receipt of refunds, interest or dividend warrants, non-receipt of

certificates after transfer and revalidation of warrants. Companies

headquartered in Delhi may have a shareholder from a very remote village in

Kerala State who may not be good at writing complaint in Hindi*.This

sometimes becomes a major impediment in prompt redressal of grievances.

The Reliance Industries Limited is one company which has opened such

centres at many places in the country which have fared well. Opening oftemporary investors service centres for taking care of sudden increase in

problems (especially after the closure of mega issues and their allotment) is

also helpful, for instance, due to sudden spurt in the problems, it helps better

understanding and faster solution of complaints. The Oswal Agro group is a

company which had, at the time of mega-issue of Bindal Agro Chem. Ltd.,

opened such centres. Similarly, ICICI and Tata Timken Ltd., have also

extended such facilities, although for a very short period, and for a very

limited purpose of Public issue complaints.

b. LODGEMENT CENTRES FOR RIGHTS ISSUE

The application forms of rights issue which, hitherto were being accepted by

banks are (in some cases) now being accepted at the predesignated companys

service centre. In a few cases, the companies have decided to handle the

acceptance of rights application form themselves. This procedure ensures aperfect and better investors assistance at the time of filling up the form, fewer

rejections of forms, speedy clearing of cheques, faster remittances of funds and

immediate allotment on closure of the issue. Earlier, the banks used to take

longer time in processing the forms and thus the procedure of finalizing the

allotment entailed undue delay. Rights issues generally remain open for a month

and the forms are relatively lesser than public issues. As a consequence of this,

the banks were taking their own time to finalise the processing before arriving at



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the final collection figure. This system was followed by TELCO, Deepak Nitrate,

Procter and Gamble, Ashok Leyland, Ranbaxy, Nicholas Lab., ESAB India,

Indian Organic and so forth.

INVESTORS GRIEVANCES

In spite of the guidelines issued by the SEBI on different matters relating to

investors protection, there are several areas where the investor usually face a lot

of problems and have grievances to be redressed.

Nature of Grievances

Refund order/Allotment Advice

Non Receipt of dividend

Non- Receipt of Share Certificates after transfer

Debentures related issues

Non- Receipt of letter of offer for Rights

Collective Investment Schemes.

Mutual Fund Portfolio Managers, Custodians

Brokers, DPS Merchant Bankers, Registrars and Transfer Agents and

other intermediaries

Following is the checklist of some of the grievances and how it can be taken up

by the investors:

In case of public issue

i. Delay in refund amount SEBI

ii. Interest in delayed amount deptt. Of company affairs

In case of listed debentures

i. Interest due SEBI

ii. Redemption proceeds deptt. Of company affairs

iii. Interest on delayed payment company trustees



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In case of units of mutual funds SEBI

In case of FD in banks and NBFCs RBI

In case of FD in companies deptt of companies affairs

REDRESSAL OF INVESTORS GRIEVANCES BY SEBI

In an effort to improve the quality of intermediary services available to investors,

procedures have been instituted for redressal of investors grievances arising from

the issue procedure and those related to brokers. These grievances are also a

reflection of the rising expectations of investors from intermediaries in the

securities markets. The intermediaries in the primary and secondary markets such

as brokers, sub-brokers, underwriters and merchant bankers, bankers to the issue,

share transfer agents, and registrars to the issue are required to be registered with

SEBI. The increasing number of investors grievances indicates that investors

satisfaction and investors confidence area set to become central issues in the

development of securities market in India.

It is essential from the point of view of promoting investors confidence in their

investment to create a sound investment climate which needs redressing the

grievances of the investors. In this regard, the services rendered by SEBI to

redress the grievances of investors are worth to mention. However, in view of

growing capital market activities, besides SEBI, investors service centres in

private sector should also come out in large number to redress the grievances of

investing community.

SEBI (disclosure and investor protection) guidelines,2000, provide the following

in respect of redressal of investor grievances:

i. The merchant bankers shall assign high priority to investors grievances

and take all preventive steps to minimize the number of complaints.



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ii. The lead manager shall set up proper grievances monitoring and redressal

systems in coordination with the issuers and registrars to the issue, and

take all necessary steps to resolve the grievance,

iii. The merchant bankers shall actively associate with the post-issue refund

and allotment activities and regularly monitor investor grievances arising

there from.

INVESTORS EDUCATION

The investors education has also emerged as a crucial part of SEBIs efforts to

protect the interest of the investors in securities market. For this purpose SEBI has

launched investor protection and education fund, regulations (2009) (appendix

1)

What are investors rights as a shareholder?

i. To receive the share certificates, on allotment or transfer (if opted for

transaction in physical mode) as the case may be, in due time.

ii. To receive copies of the Annual Report containing the Balance Sheet, the

Profit & Loss account and the Auditors Report.

iii. To participate and vote in general meetings either personally or through

proxy.

iv. To receive dividends in due time once approved in general meetings.

v. To receive corporate benefits like rights, bonus, etc. once approved.

vi. To apply to Company Law Board (CLB) to call or direct the Annual

General Meeting.

vii. To inspect the minute books of the general meetings and to receive copies

thereof.

viii. To proceed against the company by way of civil or criminal proceedings.

ix. To apply for the winding up of the company.

x. To receive the residual proceeds.



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xi. To receive offer to subscribe to rights shares in case of furtherissues of

shares.

xii. To receive offer under takeover or buyback offer under SEBI Regulations.

xiii.Besides the above rights, which you enjoy as an individual shareholder,

you also enjoy the following rights as a group:

to requisite an Extra-ordinary General meeting.

To demand a poll on any resolution.

To apply to CLB to investigate the affairs of the company.

To apply to CLB for relief in cases of oppression and/or

mismanagement.

What are investors rights as a debenture holder?

i. To receive interest/redemption in due time.

ii. To receive a copy of the trust deed on request.

iii. To apply before the CLB in case of default in redemption of debentures

on the date of maturity.

iv. To apply for winding up of the company if the company fails to pay its

debt.

v. To approach the Debenture Trustee with your grievance.

vi. You may note that the above mentioned rights may not necessarily be

absolute. For example, the right to transfer securities (in physical mode)

is subject to the companys right to refuse transfer as per statutory

provisions.

What are investors responsibilities as a security holder?

i. To be specific.

ii. To remain informed.

iii. To be vigilant.

iv. To participate and vote in general meetings.

v. To exercise your rights on your own or as a group.

What steps are taken by SEBI to make investors aware of their rights?



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A. SEBI launched a comprehensive education campaign aimed at creating

awareness among investors about securities market, which has been

christened Securities Market Awareness Campaign (SMAC).

The motto of the campaign is An Educated Investor is a Protected

Investor. The campaign was launched at the national level by the

then Prime Minister, Shri Atal Bihari Vajpayee, on January 17, 2003.

The national launch was closely followed by launches in 12 states.

The structural foundation of the campaign is based on workshops that

are being conducted all across the country with the continued and

active participation of market participants, market intermediaries,

Investors Associations etc., to spread SEBIs message of Invest With

Knowledge.

B. Workshops- At workshops, the aim is to acclimatize the investors

with the functioning of the securities market, the basic fundamentals

of investment and risk management and their rights and

responsibilities. Till date, more than 2188 workshops have been

conducted in around 500 cities/towns across the country.

C. Advertisement- SEBI has prepared simple dos and donts for

investors relating to various aspects of the securities market. Till date,

over 700 advertisements relating to various aspects of Securities

Market have appeared in 48 different newspapers/ magazines,

covering approximately 111 cities and 9 regional languages, apart

from English and Hindi.

D. Educative Materials-SEBI has prepared a standardized reading

material and presentation material for the workshops

E. All India Radio- With regard to educating investors through themedium of radio, SEBI Officials regularly participate in programmes

aired by All India Radio.

F. Website dedicated to Investor Education(http://investor.sebi.gov.in)

G. Cautionary Message on television- With a view to use the electronic

media to reach out to a larger number of investors, a short cautionary

http://investor.sebi.gov.in/http://investor.sebi.gov.in/


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message, in the form of a 40 seconds filmlet, has been prepared and

the same is being aired on television

H. Internet based response system: A simple and effective internet

based response to investor complaints has been set up. On filing of

your complaint electronically, an acknowledgement mail would be

sent to your specified email address and you will be issued a complaint

registration number instantaneously.

PART 2

UNFAIR TRADE PRACTICES

In order to protect an investor in his dealings in the secondary market, SEBI

has issued SEBI (prohibition of fraudulent and unfair trade practices relating

to securities market) regulations,2003.

No person shall directly or indirectly-

(a) Buy, sell or otherwise deal in securities in a fraudulent manner;

(b) use or employ, in connection with issue, purchase or sale of any security

listed or proposed to be listed in a recognized stock exchange, any

manipulative or deceptive device or contrivance in contravention of the

provisions of the Act or the rules or the regulations made thereunder;



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(c) Employ any device, scheme or artifice to defraud in connection with

dealing in or issue of securities which are listed or proposed to be listed on a

recognized stock exchange;

(d) engage in any act, practice, course of business which operates or would

operate as fraud or deceit upon any person in connection with any dealing in

or issue of securities which are listed or proposed to be listed on a recognized

stock exchange in contravention of the provisions of the Act or the rules and

the regulations made there under.

Dealing in securities shall be deemed to be a fraudulent or an unfair trade

practice if it involves fraud and may include all or any of the following,

namely:-

(a) Indulging in an act which creates false or misleading appearance of trading

in the securities market;

(b) dealing in a security not intended to effect transfer of beneficial ownership

but intended to operate only as a device to inflate, depress or cause

fluctuations in the price of such security for wrongful gain or avoidance of

loss;

(c) Advancing or agreeing to advance any money to any person thereby

inducing any other person to offer to buy any security in any issue only with

the intention of securing the minimum subscription to such issue;

(d) paying, offering or agreeing to pay or offer, directly or indirectly, to any

person any money or moneys worth for inducing such person fordealing in

any security with the object of inflating, depressing, maintaining or causing

fluctuation in the price of such security

(e) Any act or omission amounting to manipulation of the price of a

security;

(f) publishing or causing to publish or reporting or causing to report by a

person dealing in securities any information which is not true or which he

does not believe to be true prior to or in the course of dealing in securities;

(g) entering into a transaction in securities without intention of performing it

or without intention of change of ownership of such security;



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(h) selling, dealing or pledging of stolen or counterfeit security whether in

physical or dematerialized form;

Power of the Board to order investigation

Where the Board, the Chairman, the member or the Executive Director

(hereinafter referred to as appointing authority) has reasonable ground to

believe that

(a) the transactions in securities are being dealt with in a manner detrimental to

the investors or the securities market in violation of these regulations;

(b) any intermediary or any person associated with the securities market has

violated any of the provisions of the Act or the rules or the regulations,

it may, at any time by order in writing, direct any officer not below the rank of

Division Chief (hereinafter referred to as the Investigating Authority) specified

in the order to investigate the affairs of such intermediary or persons associated

with the securities market or any other person and to report thereon to the Board.



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PART 3

UTIMOVE TOWARDS INVESTOR EDUCATION

UTI Mutual Fund initiates the Largest Investor Education Program Swatantra.

UTI Mutual Fund (UTI MF) launches the largest Investor Education

Initiative called Swatantra for creating awareness about the concepts of

financial planning and benefits of investing in mutual funds. As a part of this

initiative three UTI Knowledge Caravans will travel through the length and

breadth of the country for spreading financial literacy.UTI Knowledge Caravans will travel from Porbandar, Jammu and Guwahati

covering all the major towns and cities in India and will complete

theirjourney at Kanyakumari. During the journey Investors Meets will be held

in various centres for spreading financial awareness.

The investor education initiative is in partnership with ministry of corporate

affairs, government of India.

This Campaign will target inculcating financial literacy to potential investors

which will help them to take informed decisions.UTI Knowledge Caravans will

travel throughout the country and will cover a total distance of over 9500 kms.

The Investor Education Initiative will be conducted in 10 languages. Penetration

of Mutual Funds in India is still very low. This Initiative will help in increasing

investor awareness,wealth creation and will also help in creating Financial

Advisors across the country.



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PART 4

INVESTMENT AVENUES

Structured investment products blend a unique combination of security and risk in

an investment portfolio. They have some typical characteristics and are usually

prevalent in the well developed financial markets.

In the past investment alternatives were limited to real estate, schemes of the post

office and banks. At present, a wide variety of investment avenues are opened to

investors to suit their interest. Knowledge about the different avenues enables the

investors to choose investment alternatives. The required level of return and risk

tolerance level will decide the type of investment to be made.

The investment alternative ranges from financial securities to traditional non

security instruments. The financial securities may be negotiable or non

negotiable.

The negotiable securities are transferable. They may yield variable or fixed

income. Securities like shares are variable income securities. Bonds, debentures,

IVPs and KVPs, and money market securities yield fixed income.

The non negotiable financial investments are also known as non securitized

financial investments. Deposit schemes by banks, post offices.

Mutual funds are other investment types of recent times. The investors with

limited funds can invest in mutual funds and can have the benefits of stock market

and money market investments as specified by the particular fund.

The real estate always finds a place in portfolio. They are gold, silver, arts,

property, and paintings. These are non financial investment.



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NEGOTIABLE SECURITIES

Variable income securities

Equity shares- Equity shares are the equally divided capital of a company. Total

capital contribution for a company comprises of investments through equity share

holdings by small and big investors. The investors who have a stake in a company

are referred to as shareholders. The equity shares are therefore documents issued

by a company and floated in the open market for purchase by a shareholder which

entitles them to be one of the owners of the company.

The profits of equity shareholders depend on the profit making capability of the

company that they have invested in. In a situation where the company has made

huge profits the benefits are passed over to the equity share holders by way of

dividends. The equity shareholders also enjoy voting rights in the company.

The stock market classifies shares into growth, income, defensive, cyclical and

speculative shares.

a) The stocks that have higher rate of growth than the industrial growth

rate in profitability are referred to as growth shares.

b) Income shares belong to companies that have comparatively stable

operations and limited growth options like Cadburys, nestle, and

Hindustan lever.

c) Defensive stocks are relatively unaffected by the market movements

d) The upward and the downward movement of the business cycle affect

the business prospects of certain companies and their stock prices. The

automobile sector is affected by business cycles.

e) Shares that have lot of speculations trading in them is referred to as

speculative shares.

SEBIs (delisting of equity shares) regulations, 2009- appendix 2.



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Fixed income securities

Preference shares- Preference shares offer their owners preferences over

ordinary shareholders. There are two major differences between ordinary and

preference shares:

Preference shareholders are often entitled to a fixed dividend even when

ordinary shareholders are not.

Preference shareholders cannot normally vote at general meetings.

Preference shares are usually cumulative and this means that if this year'sdividend wasn't paid, then it will be carried forward to next year. If a preference

share is a participating preference share then the owner of such a share has the

right to participate in, or receive, additional dividends over and above the fixed

percentage dividend discussed above. The additional dividend is usually paid in

proportion to any ordinary dividend declared. Finally, preference shares may be

convertible. If the shares are convertible then the shareholders have the option at

some stage of converting them into ordinary shares.

Debentures- Debentures are long-term Debt Instrument issued by governments

and big institutions for the purpose of raising funds. Debentures have some

similarities with Bonds but the terms and conditions of securitization of

Debentures are different from that of a Bond. A Debenture is regarded as an

unsecured investment because there are no pledges (guarantee) or liens available

on particular assets. Nonetheless, a Debenture is backed by all the assets which

have not been pledged otherwise. Normally, Debentures are referred to as freely

negotiable Debt Instruments. The Debenture holder functions as a lender to theissuer of the Debenture. In return, a specific rate of interest is paid to the

Debenture holder by the Debenture issuer similar to the case of a loan. In

practice, the differentiation between a Debenture and a Bond is not observed

every time. In some cases, Bonds are also termed as Debentures and vice-versa. If

a bankruptcy occurs, Debenture holders are treated as general creditors. The



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Debenture issuer has a substantial advantage from issuing a Debenture because

the particular assets are kept without any encumbrances so that the option is open

for issuing them in future for financing purposes.

Bonds- are debt instruments that are issued by companies, municipalities andgovernments to raise funds for financing their capital expenditure. By purchasing

a bond, an investor loans money for a fixed period of time at a predetermined

interest rate. While the interest is paid to the bond holder at regular intervals, the

principal amount is repaid at a later date, known as the maturity date. While both

bonds and stocks are securities, the principle difference between the two is that

bond holders are lenders, while stockholders are the owners of the organization.

A bond's price refers to the amount investors are willing to pay for an existing

bond. The bonds price is important if you wish to trade the bond with another

investor. The main factors that impact bond prices are

1. Interest rate- When interest rates in the market rise, newly issued bonds

become more lucrative (offer higher yields). This makes existing bonds

less competitive and exerts pressure on the price of existing bonds. Thus

interest rates andbond prices move in opposite directions.

2. Inflation-High inflation erodes the value of the return that is earned when

the bond matures. Thus inflation and bond prices also move in opposite

directions.

3. Financial health of the insurer-The financial health of the company or

government that has issued the bond impacts bond prices. If the issuer is

financially healthy, investors have greater confidence in receiving the

interestpayments and principal amount at maturity.

IVPs and KVPs- these are saving certificate issued by the post office with the

name indira vikas patra and kisan vikas patra. National saving certificate NSC is a

six year tax saving instrument presently giving 8% interest. IVP is no more used.

KVP is also giving 8% interest.

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In decision delivered dated 3 April 2009 ,Kerala High Court in case of Dr R.

V.Patel vs CIT decided that Indira Vikas Patra is not a capital asset , therefore,

maturity proceeds paid by post office is not consideration for transfer of capital

asset.As such there can not be capital gains .

MUTUAL FUNDS

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A Mutual Fund is a trust that pools the savings of a number of investors who

share a common financial goal. The money thus collected is then invested in

capital market instruments such as shares, debentures and other securities. The

income earned through these investments and the capital appreciations realized

are shared by its unit holders in proportion to the number of units owned by them.

Thus, a Mutual Fund is the most suitable investment for the layman/common man

as it offers an opportunity to invest in a diversified, professionally managed

basket of securities at a relatively low cost. The flow chart below describes

broadly the working of a mutual fund:

The mutual fund issues shares of stock (just like any other corporation) to

investors in exchange for cash. It is interesting to note that funds do not issue a

pre-determined amount of stock, as do most corporations; new shares are issued

as each new investment is made. Investors thus become part-owners of the funditself, and thereby the assets of the fund. The fund, in turn, uses investors' cash to

purchase securities, such as stocks and bonds. As mentioned above, the primarly

assets of a fund are the securities it invests in (other assets, such as equipment, are

a relatively small part of the total assets of a fund).

ADVANTAGES OF MUTUAL FUNDS



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AFFORDABILITY

A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending

upon the investment objective of the scheme. An investor can buy in to a portfolio

of equities, which would otherwise be extremely expensive. Each unit holder thus

gets an exposure to such portfolios with an investment as modest as Rs.500/-.

DIVERSIFICATION

It simply means that an investor must spread his investment across different

securities (stocks, bonds, money market instruments, real estate, fixed deposits

etc.) and different sectors (auto, textile, information technology etc.). This kind of

a diversification may add to the stability of his returns.

VARIETY

Mutual funds offer a tremendous variety of schemes. This variety is beneficial in

two ways: first, it offers different types of schemes to investors with different



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needs and risk appetites; secondly, it offers an opportunity to an investor to invest

sums across a variety of schemes, both debt and equity.

PROFESSIONAL MANAGEMENT

When an investor buys a mutual fund, he is handing his money to an investment

professional that has experience in making investment decisions. It is the Fund

Manager's job to (a) find the best securities for the fund, given the fund's stated

investment objectives; and (b) keep track of investments and changes in market

conditions and adjust the mix of the portfolio, as and when required.

TAX BENEFITS

Any income distributed after March 31, 2002 will be subject to tax in theassessment of all Unit holders. However, as a measure of concession to Unit

holders of open-ended equity-oriented funds, income distributions for the year

ending March 31, 2003, will be taxed at a concessional rate of 10.5%.

REGULATIONS

Securities Exchange Board of India (SEBI), the mutual funds regulator has

clearly defined rules, which govern mutual funds. These rules relate to the

formation, administration and management of mutual funds and also prescribe

disclosure and accounting requirements. Such a high level of regulation seeks to

protect the interest of investors.

DISADVANTAGES OF MUTUAL FUNDS

PROFESSIONAL MANAGEMENT



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Many investors debate over whether or not the so-called professionals are any

better than them at picking up the stocks. Management is by no means infallible,

and, even if the fund loses money, the manager still takes his/her cut.

COSTS

Mutual funds don't exist solely to make your life easier--all funds are in it for a

profit. The mutual fund industry is masterful at burying costs under layers of

jargon.

DILUTION

It's possible to have too much diversification. Because funds have small holdings

in so many different companies, high returns from a few investments often don't

make much difference on the overall return. Dilution is also the result of a

successful fund getting too big.

TAXES

When making decisions about investors money, fund managers don't consider

their personal tax situation. For example, when a fund manager sells a security,

capital-gain tax is triggered, which affects how profitable the individual is from

the sale.

UNITS IN A MUTUAL FUND

1. The pool of money of a fund is divided into units

The face value of the units is Rs. 10

Number of units issued by the fund*Rs 10 is the value of the pool

2. Investor holding is a fund is denoted in units

Investments are made in rupees but converted into units

3. The sum of the face value of all units issued by a fund is its unit capital

Units issued*face value



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This is the corpus of the fund

4. Mutual fund regulations require the pool of funds of each scheme to be

maintained separately.

MUTUAL FUND SCHEMES

Equity/Growth SchemesThe aim of growth funds is to provide capital appreciation over the medium to

long- term. Such schemes normally invest a major part of their corpus in equities.

Such funds have comparatively high risks. These schemes provide different

options to the investors like dividend option, capital appreciation, etc. and the

investors may choose an option depending on their preferences. The investors

must indicate the option in the application form. The mutual funds also allow the

investors to change the options at a later date. Growth schemes are good for

investors having a long-term outlook seeking appreciation over a period of time.

Debt/income schemes

The aim of income funds is to provide regular and steady income to investors.

Such schemes generally invest in fixed income securities such as bonds, corporate

debentures, Government securities and money market instruments. Such funds are

less risky compared to equity schemes. These funds are not affected because of

fluctuations in equity markets. However, opportunities of capital appreciation are

also limited in such funds. The NAVs of such funds are affected because of

change in interest rates in the country. If the interest rates fall, NAVs of such

funds are likely to increase in the short run and vice versa. However, long term

investors may not bother about these fluctuations.

Sector Specific Schemes

These are the funds/schemes which invest in the securities of only those sectors or

industries as specified in the offer documents. e.g. Pharmaceuticals, Software,

Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in

these funds are dependent on the performance of the respective sectors/industries.

While these funds may give higher returns, they are more risky compared to

http://www.reliancemutual.com/OurSchemes/EquityGrowthSchemes.aspxhttp://www.reliancemutual.com/OurSchemes/SectorSpecificScheme.aspxhttp://www.reliancemutual.com/OurSchemes/EquityGrowthSchemes.aspxhttp://www.reliancemutual.com/OurSchemes/SectorSpecificScheme.aspx


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diversified funds. Investors need to keep a watch on the performance of those

sectors/industries and must exit at an appropriate time. They may also seek advice

of an expert.

Exchange Traded Funds (ETFs)

Exchange Traded Funds (ETFs) are usually passively managed mutual fund

schemes tracking a benchmark index and reflect the performance of that index.

These schemes are listed on the stock exchange and therefore have the flexibility

of trading like a share on the stock exchange. It can also be looked as a security

that tracks an index, a commodity or a basket of assets like an index fund, but

trades like a stock on an exchange, thus experiencing price changes throughout

the day as it is bought and sold.

Fixed Maturity Plans (FMPs)

Fixed Maturity Plans (FMPs) are basically debt oriented investment schemes with

a pre-specified tenure offered by mutual funds. FMPs invest in a portfolio of debt

instruments whose maturity coincides with the maturity of the concerned FMP.

The primary objective of a FMP is to generate income while aiming to protect the

capital by investing in a portfolio of debt and money market securities. Since

FMPs are available with several maturity options, one can invest in the relevant

plan depending upon his investment horizon and the requirement of cash flows.

Regulatory Authorities

To protect the interest of the investors, SEBI formulates policies and regulates

the mutual funds. It notified regulations in 1993 (fully revised in 1996) and

issues guidelines from time to time. MF either promoted by public or by

private sector entities including one promoted by foreign entities is governed

by these Regulations. SEBI approved Asset Management Company (AMC)

manages the funds by making investments in various types of securities.

Custodian, registered with SEBI, holds the securities of various schemes of the

fund in its custody. According to SEBI Regulations, two thirds of the directors

of Trustee Company or board of trustees must be independent. The

Association of Mutual Funds in India (AMFI) reassures the investors in units

of mutual funds that the mutual funds function within the strict regulatory

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framework. Its objective is to increase public awareness of the mutual fund

industry. AMFI also is engaged in upgrading professional standards and in

promoting best industry practices in diverse areas such as valuation,

disclosure, transparency etc.

INSURANCE

Insurance Industry in India

1818 saw the advent of life insurance business in India with the

establishment of the Oriental Life Insurance Company in Calcutta. This

Company however failed in 1834. In 1829, the Madras Equitable had begun

transacting life insurance business in the Madras Presidency. 1870 saw the

enactment of the British Insurance Act and in the last three decades of thenineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of

India (1897) were started in the Bombay Residency. This era, however, was

dominated by foreign insurance offices which did good business in India,

namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe

Insurance and the Indian offices were up for hard competition from the foreign

companies.

In 1914, the Government of India started publishing returns of Insurance

Companies in India. The Indian Life Assurance Companies Act, 1912 was the

first statutory measure to regulate life business. In 1928, the Indian Insurance

Companies Act was enacted to enable the Government to collect statistical

information about both life and non-life business transacted in India by Indian

and foreign insurers including provident insurance societies. In 1938, with a

view to protecting the interest of the Insurance public, the earlier legislation

was consolidated and amended by the Insurance Act, 1938 with

comprehensive provisions for effective control over the activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies.

However, there were a large number of insurance companies and the level of

competition was high. There were also allegations of unfair trade practices.

The Government of India, therefore, decided to nationalize insurance business



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An Ordinance was issued on 19th January, 1956 nationalizing the Life

Insurance sector and Life Insurance Corporation came into existence in the

same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75

provident societies245 Indian and foreign insurers in all. The LIC had

monopoly till the late 90s when the Insurance sector was reopened to the

private sector.

The Insurance Regulatory and Development Authority (IRDA)

Reforms in the Insurance sector were initiated with the passage of the IRDA

Bill in Parliament in December 1999. The IRDA since its incorporation as a

statutory body in April 2000 has fastidiously stuck to its schedule of framing

regulations and registering the private sector insurance companies. The other

decisions taken simultaneously to provide the supporting systems to the

insurance sector and in particular the life insurance companies was, the launch

of the IRDAs online service for issue and renewal of licenses to agents. The

approval of institutions for imparting training to agents has also ensured that

the insurance companies would have a trained workforce of insurance agents

in place to sell their products. Since being set up as an independent statutory

body, the IRDA has put in a framework of globally compatible regulations. In

the private sector, 12 life insurance and 6 general insurance companies havebeen registered.

Here are some of the new insurance products launched in India in 2010 :

ICICI Lombard:ICICI Lombard has come up with a superb product for our

farmers who are the most important and yet the most neglected segment of our

society. Lombard Insurance along with Weather Risk Management Services

has come up with hybrid weather cum satellite imagery based insurance

product for farmers in India. Although weather based crop insurance products

are not new to Indian agriculture but the distinctive feature of this product is

that it uses satellite based imagery to assess crop yields. With the help of this

product farmerswould take relatively lesser time to estimate the yield of an

area by conducting crop cutting experiments. This new product would also

help crop monitoring and predicting more accurate food grain production, thus



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benefitting the farmers tremendously to plan their sales and also the

government to avert the possibility of any shortage in food grain production.

Navkalyan Yojna:An initiative of a first of its kind taken by Tata AIG Life

Insurance specially made to suit the needs of the rural sector. Navkalyan Yojnais a five year Micro Insurance plan that provides financial protection to the

rural policy holder at reasonable rates. The policy also has the facility of

adding an Accidental Death benefit rider that will provide additional benefit

less than or equal to the sum assured in the case of an unfortunate event.

Sampoorn Bima Yojna: Another attempt to provide assistance to the rural

policy holder Tata AIG Life Insurance has come up with the Sampoorn Bima

Yojna which promises to pay the policy holder a cover for 15 years on

payment of a premium for 10 years.

Smart Ulip:The life insurance arm of State Bank of India SBI Life Insurance

Co Ltd has come up with an innovative unit linked product called Smart Ulip.

The product promises to return a Net Asset Value of 168 fortnightly NAVs

during the first seven years or NAV after maturity whichever is higher. The

Smart Ulip also provides to its customers the benefit of shorter premium

paying terms which could be as short as 3 - 5 years and further also give them

the facility of tax benefit under section 80 C and section 10 (10 D) of the

Income Tax Act.

Free Cover Plan:The latest product offered by Aviva Life Insurance is meant

for new parents, which is known as Free Cover Plan. This plan provides life

cover to new parents up to Rs 6, 70,000 approximately if their new born baby

is not more than 6 months old. This policy would last until the child's first

birthday. The basic idea behind taking such a step to provide free insurance to

new parents is basically a way to tell young parents that the necessity of

financial protection starts early.

New Accelerated Critical Illness Policy: Future Generali India Insurance

Company Ltd has launched its latest health insurance product which is termed

as New Accelerated Critical Illness Policy. The extra ordinary feature about



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this product is that if claimed before the end of the term period the assured

sum is paid to you. To be a little more precise in the event of a diagnosed

critical illness a person can claim the amount assured to him so that the

treatment can start off immediately. It is a comprehensive plan with low rates

of premiums to be paid. However the policy covers 12 critical illnesses.

CHAPTER 5 DATA ANALYSIS AND

REPRESENATION

Analysis is based on primary source. The pupose of analysis is to find out

the choices made by individual investors while investing and also to find

out on what factors their choices are based.

So, for this purpose I have made use of questionnaire method and

interview technique. A sample size of 60 individuals was taken, from

different backgrounds and with different taste and preferences.

Basis of analysis are shown in the form of pie charts and bar diagrams

wherever required.



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A. Occupation -

Occupation of individual are categorized into five categories:

i. Government employees

ii. Corporate employees

iii. Practicing professionals

iv. Entrepreneur

v. Retired

occupation Percentage of individulals

Govt. employees 25%

Corporate employees 45%

Practicing professionals 10%

entrepreneur 15%

retired 5%

Study reveals that

i. 25% of individual interviewed were govt. employees,

ii. Corporate employees were 45%

iii. Practicing employees accounted for 10% of individual interviewed

iv. Entrepreneur accounted for 15% of 60 individuals interviewed

v. 5% of individuals interviewed were retired peoples.



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A. Annual income

Incomes are categorized into:

i. Up to Rs. 2 lacs p.a

ii. More than Rs. 2 lac but less than 4 lacs p.a

iii. More than Rs. 4 lacs but less than Rs. 6 lacs p.a

iv. More than Rs. 6 lacs but less than Rs. 10 lacs p.a

v. More than Rs. 10 lacs p.a

TABULAR REPRESENTATION

Income level Percentage of people

Up to 2lakh 10%

2lakh- 4lakh 35%

4lakh-6lakh 50%

6lakh-10lakh 5%

More than 10lakh 0%



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The study reveals that maximum of individuals interviewed are earning between

Rs. 4lakh and Rs. 6lakh, which accounted for 50%.

10% of individuals are earning up to Rs.2lakh

35% are earning between Rs.2lakh and Rs. 4lakh

5% are earning between Rs. 6lakh and Rs. 10lakh

And none of the individuals are earning more than Rs. 10lakh

A. plans for investment


Plan for investment Percentage of people

yes 95%

no 5%



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Plans for Investment

0

5

10

15

20

25

30

35

40

45

50

no yes

no

yes

The survey shows that14% of the whole population is not interested in investment

and 86% of people are interested in investment.

B. Investment preferences-

Asset allocation Risk return Projected return

(maximum/minimum)

Portfolio type

Debt 80%; cash 20%; equity 0% Very low 7% 7% Cash & income

Debt75%; cash10%; equity 15% low 8% 6% income

Debt50%; cash10%; equity 40% moderate 12% 7% balanced



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Debt35%; cash10%; equity 55% Above

average

18% 5% growth

Debt25%; cash10%; equity 65% high 25% 3% High growth


Investment preferences Percentage of people

Cash and income 35%

income 45%

balanced 10%

growth 5%

High growth 5%

Maximum of 45% individuals interviewed preferincome portfolio comprising of

higher mix of debt and lower proportion of equity

35% individuals are conservative in their preferences and are not willing to take

risk and prefer 0% of equity and goes forcash and income portfolio

Balanced portfolio are preferred by 10% individuals

Growth portfolio comprises large investments in equity as then to debt, and

accounts for 5%



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High growthportfolios make very large investments in equity and are preferred

by 5% of individuals.

C. Important investment goals-

A. Preserving original investment

B. Receiving growth and providing income

C. Growing faster than inflation and providing income

D. Growing fast as possible even if there is no income


Investment goals Percentage of people

A 15%

B 35%

C 45%

D 5%

From the survey it was revealed that the most important goal for any individual

investor is to grow as well as earn income. Growth is in terms of growing faster

than inflation rate prevailing so that future income can be generated.

The next important goal for investors is just to grow and earn income no matter

what the inflation rate is going on.

A. Preferences for investment products-

i. Fixed deposits



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ii. Government securities and corporate bonds

iii. Mutual funds

iv. Shares or derivatives


Investment products Percentage of people

Fixed deposits 30%

Govt securities 10%

Mutual funds 45%

shares 15%

Due to higher level of knowledge that the customers are getting, the most imp

source of investment for them are mutual funds.

15% of individuals investment goes to shares because of risk associated with it.

Least preffered amongst the investment products are govt. securities and

corporate bonds because of lack of knowledge.



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CHAPTER 6 FINDINGS AND DISCUSSIONS

Through the survey I could found out the following

Awareness of MUTUAL FUNDS is increasing as more number of private

players is entering in life insurance industry.

Mutual Fund is also getting more and more famous in Indian market as

many private companies innovating new funds as the investors demand.

Fund managers should continuous Investor awareness Programs to make

the investors aware of technicalities of fund management and the return

aspects.

Agents, Service personnel must be able to give correct and timely

information about NAV and the return on different schemes.

There is a need for insurers to undertake a demand audit in order to

understand what the policyholder wants and needs.

Deriving the right feedback from customers and bringing out innovative

products which cater to customer demands will go a long way in tapping

the market potential of the insurance and Mutual fund sector.

Regulatory measures by SEBI should be clearly explained to the investors.

Positioning of the schemes and their branding will help a lot for growth of

the industry. Creativity and innovation are the means of marketing in the

days to come for Indian mutual fund market.



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CHAPTER 7 CONCLUSIONS ANDRECOMMENDATIONS

Following conclusions were made.

Using the interview technique, it was found that people working in

government sectors and those who are retired are more conservative

regarding the investment decisions as regards corporate employees and

practicing professionals. The differences in their investment decisions

are due to the difference in knowledgelevel.

Income pattern of individuals shows that maximum earners are within the

income bracket of Rs. 4 lakh to Rs. 6 lakh. This shows that higher the

income more willing are people to invest. And lower the income less

wiling they will be to invest.

Maximum people those were interviewed are interested for going into

investments. This shows that investment patterns for individual investors

have changed; they are ready to take risk only on the grounds of higher

returns.

Though individual investors are ready to take risk but their risk is only on

the part of investments made. They still are conservative while making

investment decisions. They go for higher amount of debt as compared to

equity.

While interviewing it was also found that the most important goal forinvestors regarding the expected returns are growing faster than inflation

and also earning income. This looks to be one of the reasons behind

decline in growth of FDs and govt. deposits as their returns are not

covering the inflation rate.

Mutual funds are important investment products due to following reasons



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Diversification:Using mutual funds can help an investor diversify

their portfolio with a minimum investment. When investing in a

single fund, an investor is actually investing in numerous

securities. This minimizes the risk attributed to a concentrated

position. .

Documents

Executive Summary Satty Final