Project on MF & INS

8/8/2019 Project on MF & INS

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1. ATTEND AMFI TRAINING

Concept:

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 appreciation realised

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 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:


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Mutual Funds in India are governed by the SEBI (Mutual Fund) Regulations

1996 as amended from time to time.

Types of Mutual Funds Schemes:

Wide variety of Mutual Fund Schemes exists to cater to the needs such as

financial position, risk tolerance and return expectations etc. thus mutual

funds has Variety of flavours, Being a collection of many stocks, an

investors can go for picking a mutual fund might be easy. There are over

hundreds of mutual funds scheme to choose from. It is easier to think of

mutual funds in categories, mentioned below.

Overview of existing schemes existed in mutual fund category: BY

STRUCTURE

1. Open - Ended Schemes:An open-end fund is one that is available for subscription all through the

year. These do not have a fixed maturity. Investors can conveniently buy

and sell units at Net Asset Value ("NAV") related prices. The key feature

of open-end schemes is liquidity.

2. Close - Ended Schemes:These schemes have a pre-specified maturity period. One can invest

directly in the scheme at the time of the initial issue. Depending on thestructure of the scheme there are two exit options available to an investor


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after the initial offer period closes. Investors can transact (buy or sell) the

units of the scheme on the stock exchanges where they are listed. The

market price at the stock exchanges could vary from the net asset value

(NAV) of the scheme on account of demand and supply situation,

expectations of unit holder and other market factors. Alternatively someclose-ended schemes provide an additional option of selling the units

directly to the Mutual Fund through periodic repurchase at the schemes

NAV; however one cannot buy units and can only sell units during the

liquidity window. SEBI Regulations ensure that at least one of the two

exit routes is provided to the investor.

3. Interval Schemes:Interval Schemes are that scheme, which combines the features of open-

ended and close-ended schemes. The units may be traded on the stockexchange or may be open for sale or redemption during pre-determined

intervals at NAV related prices.

Overview of existing schemes existed in mutual fund category: BY NATURE

1. Equity fund:These funds invest a maximum part of their corpus into equities holdings.

The structure of the fund may vary different for different schemes and the

fund managers outlook on different stocks. The Equity Funds are sub-

classified depending upon their investment objective, as follows:

Diversified Equity Funds

Mid-Cap Funds

Sector Specific Funds

Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity

funds rank high on the risk-return matrix.

2. Debt funds:The objective of these Funds is to invest in debt papers. Government

authorities, private companies, banks and financial institutions are some

of the major issuers of debt papers. By investing in debt instruments,

these funds ensure low risk and provide stable income to the investors.

Debt funds are further classified as:

Gilt Funds: Invest their corpus in securities issued by Government,popularly known as Government of India debt papers. These Funds carry


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zero Default risk but are associated with Interest Rate risk. These

schemes are safer as they invest in papers backed by Government.

Income Funds: Invest a major portion into various debt instruments such

as bonds, corporate debentures and Government securities.

MIPs: Invests maximum of their total corpus in debt instruments whilethey take minimum exposure in equities. It gets benefit of both equity and

debt market. These scheme ranks slightly high on the risk-return matrix

when compared with other debt schemes.

Short Term Plans (STPs): Meant for investment horizon for three to six

months. These funds primarily invest in short term papers like Certificateof Deposits (CDs) and Commercial Papers (CPs). Some portion of the

corpus is also invested in corporate debentures.

Liquid Funds: Also known as Money Market Schemes, These fundsprovides easy liquidity and preservation of capital. These schemes invest

in short-term instruments like Treasury Bills, inter-bank call money

market, CPs and CDs. These funds are meant for short-term cash

management of corporate houses and are meant for an investment horizonof 1day to 3 months. These schemes rank low on risk-return matrix and

are considered to be the safest amongst all categories of mutual funds.

3. Balanced funds:As the name suggest they, are a mix of both equity and debt funds. They

invest in both equities and fixed income securities, which are in line with

pre-defined investment objective of the scheme. These schemes aim to

provide investors with the best of both the worlds. Equity part provides

growth and the debt part provides stability in returns.

Further the mutual funds can be broadly classified on the basis of investment

parameter viz,

Each category of funds is backed by an investment philosophy, which is pre-

defined in the objectives of the fund. The investor can align his own investment

needs with the funds objective and invest accordingly.

By investment objective:

Growth Schemes: Growth Schemes are also known as equity schemes.The aim of these schemes is to provide capital appreciation over medium


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to long term. These schemes normally invest a major part of their fund in

equities and are willing to bear short-term decline in value for possible

future appreciation.

Income Schemes: Income Schemes are also known as debt schemes. Theaim of these schemes is to provide regular and steady income to

investors. These schemes generally invest in fixed income securities such

as bonds and corporate debentures. Capital appreciation in such schemes

may be limited.

Balanced Schemes: Balanced Schemes aim to provide both growth andincome by periodically distributing a part of the income and capital gains

they earn. These schemes invest in both shares and fixed income

securities, in the proportion indicated in their offer documents (normally50:50).

Money Market Schemes: Money Market Schemes aim to provide easyliquidity, preservation of capital and moderate income. These schemes

generally invest in safer, short-term instruments, such as treasury bills,

certificates of deposit, commercial paper and inter-bank call money.

Other schemes Tax Saving Schemes:Tax-saving schemes offer tax rebates to the investors under tax laws

prescribed from time to time. Under Sec.88 of the Income Tax Act,

contributions made to any Equity Linked Savings Scheme (ELSS) are

eligible for rebate.

Index Schemes:Index schemes attempt to replicate the performance of a particular index

such as the BSE Sensex or the NSE 50. The portfolio of these schemes willconsist of only those stocks that constitute the index. The percentage of each

stock to the total holding will be identical to the stocks index weightage. And

hence, the returns from such schemes would be more or less equivalent to

those of the Index.

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


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performance of the respective sectors/industries. While these funds may give

higher returns, they are more risky compared to diversified funds. Investors

need to keep a watch on the performance of those sectors/industries and must

exit at an appropriate time.

Advantages of Investing in Mutual Funds:

1. Professional Management - The basic advantage of funds is that, they

are professional managed, by well qualified professional. Investors

purchase funds because they do not have the time or the expertise to

manage their own portfolio. A mutual fund is considered to be relatively

less expensive way to make and monitor their investments.

2. Diversification - Purchasing units in a mutual fund instead of buyingindividual stocks or bonds, the investors risk is spread out and minimized

up to certain extent. The idea behind diversification is to invest in a large

number of assets so that a loss in any particular investment is minimized

by gains in others.

3. Economies of Scale - Mutual fund buy and sell large amounts of

securities at a time, thus help to reducing transaction costs, and help to

bring down the average cost of the unit for their investors.

4. Liquidity - Just like an individual stock, mutual fund also allows

investors to liquidate their holdings as and when they want.

5. Simplicity - Investments in mutual fund is considered to be easy,

compare to other available instruments in the market, and the minimum

investment is small. Most AMC also have automatic purchase plans

whereby as little as Rs. 2000, where SIP start with just Rs.50 per month

basis.

Disadvantages of Investing Mutual Funds:

1. Professional Management- Some funds doesnt perform in neither the

market, as their management is not dynamic enough to explore the

available opportunity in the market, thus many investors debate over

whether or not the so-called professionals are any better than mutual fund

or investor him self, for picking up stocks.

2. Costs The biggest source of AMC income, is generally from theentry & exit load which they charge from an investors, at the time of


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purchase. The mutual fund industries are thus charging extra cost under

layers of jargon.

3. Dilution - Because funds have small holdings across different

companies, high returns from a few investments often don't make muchdifference on the overall return. Dilution is also the result of a successful

fund getting too big. When money pours into funds that have had strong

success, the manager often has trouble finding a good investment for all

the new money.

4. Taxes - when making decisions about your money, fund managers

don't consider your personal tax situation. For example, when a fund

manager sells a security, a capital-gain tax is triggered, which affects how

profitable the individual is from the sale. It might have been more

advantageous for the individual to defer the capital gains liability.

Why Mutual Fund as a Investment Tool?

Following below is the table showing the Comparison of Mutual Fund with

Other Options:-

Liquidity Risk Return

Real Estate low med high

Fixed deposits high med med

Govt Securities high low low

Gold high high low

Shares high high med

Mutual Fund high med high*

*in long term


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ABBREVIATIONS USED FOR MUTUAL FUNDS:-

AMFI -Association of Mutual Funds in India

AMC -Assets Management Company

AGNI -AMFI guidelines & Norms for intermediaries

FII -Foreign Institutional Investor

KIM -Key Information Memorandum

MMMF -Money Market Mutual Funds

FOF -Fund of Funds

NAV -Net Assets Value

NFO -New Fund Offer

NRI -Non Resident Indian

BSE -Bombay Stock Exchange

NSE -National Stock Exchange

NPA -Non Performing Assets

RBI -Reserve Bank of India

SRO -Self Regulatory Organization

PER or P/E -Price Earning Ratio

WDM -Wholesale Debt Market

YTM -Yield to Maturity

ARN -AMFI Registration Number

SIP -Systematic Investment Plan

SWP -Systematic Withdrawal Plan

STP -Systematic Transfer Plan


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PREPARE A PROCESS NOTE FOR MUTUAL

FUND OPERATIONS IN YOUR REGION

Mutual Funds & Investments (Fixed Deposits) are part of MMFSL. We

ourselves are the National Distributor for all the National & International Funds.

Being a National distributor we have a Corporate Tie up with all the AMCs for

additional Revenue. We do appoint brokers who are AMFI certified for doing

the business. Different products handled by Mutual Fund department are Mutual

Funds, SIP etc & Fixed Deposits.

PROCESS NOTE FOR MUTUAL FUND OPERATIONS:

Currently Mutual Funds are not catered at Kalyan branch. It does not mean that

the area under Kalyan does not offer potential for Mutual Funds distribution.

Process which should be adopted to start Mutual Funds Operation in Kalyan:

1. Firstly dedicated Manpower should be made available and responsible to

carry out MF business in the area.

2. Promotion activity should be carried out as people are not aware that

MMFSL also caters products such as Mutual Funds, Fixed Deposits.

3. We have ready data base of our customers who have availed loans from

us, CROSS SELLING of MFs can be done to these set of customers.

4. Our employees should be targeted for investments in SIP.

5. Cold calling, visits in the local industrial belt should be carried out to

promote the product. There should be a process in place to promote MFs

operation; power point presentation should be given in Companies, Malls

etc.

6. Summer interns from colleges could help in spreading awareness and in

generating sales at minimum cost (i.e. Stipend).

7. MIS system (like Fundz Magic) could be brought in to speedily cater the

needs of customer and to enhance the sales.


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PROCESS FOR SALES

1. Data base is collected from various sources.

2. Leads are generated through Cold Calling on the Data Base we have.

3. Then Some Suspects are targeted to convert them into Prospects.

4. These Prospects are approached by our employee and efforts are made to

convert the prospect into a Client.

5. Once the clients are convinced the deal is closed.

6. Once the customer is convinced they fill the application form & a cheque

or DD is collected from the customer in the name of the particular mutual

fund & submit it to the AMC.

7. Commission is received on the monthly or quarterly basis from the

AMCs.8. They are having Fin smart Portfolio Tracker software which maintains

the portfolio of the customers.

9. The customers can login to our site by using the ID & password given to

them by us & can view their portfolio.

10.They send the daily analyzer mail to the customer & keep updating them

with the current market conditions.

11.They provide various services like reshuffling of the portfolio of the

customers if they are satisfied.


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ATTEND PRODUCT TRAINING OF LIFE AND

& NON-LIFE INSURANCE COMPANIES

Process note for Insurance Operations in the area

MIBL (Mahindra Insurance Brokers Limited) a wholly owned subsidiary of

MMFSL is the company that looks after the insurance operations in the country.

As the name suggest MIBL plays the role of the broker or the chain partner for

the various Insurance Companies. It deals in both Life & Non life Insurance

Products. Under Life Insurance products we are having MLS (Mahindra Loan

Suraksha) & Life Insurance. Under Non- Life we have Motor Insurance &

Corporate Insurances. The business of MLS is done through the business

executives of MMFSL & the business of Life Insurance is done through the

employees of MIBL. Same as the MLS major Contribution of Motor Insurance

Business is done by MMFSL employee with the help of MIBL executive, But

for the Corporate Insurance Business is completely generated by MIBL

executive.

Process of Operations for the Retail Life Insurance:-

At the initial stage the Retail Life Insurance employee sends the request

for the forms to the H.O (Head Office).

After receiving the request the H.O takes the forms from the concern

insurance companies & put its stamp & code on every form.

Then those forms are forwarded to the respective branches.


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After receiving the forms the employees approaches to the customer by

taking their appointments & convince them to take a particular product.

The Retail Life Insurance team uses the database of the MMFSL as well

as does cold calling for reaching or approaching the customers.

When the customers are convinced for buying the particular product

then they take the cash or the cheque in the name of the concern

insurance company from the customer & give them a money receipt of it.

When the customer is convinced all the Medical Tests are conducted as

required by the IRDA norms & concerned companies.

Then the photo copy of the form & the receipt is send to the H.O & the

original documents are submitted to the concern insurance company.

The insurance company sends us the weekly MIS.

From the weekly MIS we get the Policy Number of the confirmed cases.

The cases which are reflected in the weekly MIS is the reflection of our

business on the basis of which we get our brokerage from the concerned

companies & those cases which dont get reflected in the MIS are

supposed to be on hold due to some or the other reason.


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For the cases which are put on hold by the company, we communicate it

with the company & try to solve them with the help of the customers if it

is possible.

So this is the general process of operation of the Retail Life Insurance

department in the area. It is a good process but would be more efficient &

prompt if the employees are trained regularly on the various products.

MAHINDRA LOAN SURAKASHA (MLS)

Mahindra Loan Suraksha (MLS) is a Credit Term Insurance policy. In simple

words, MLS protects the Customers family and Asset of the company in case

of unfortunate death of the customer during the loan tenure of the company by

covering the Outstanding Finance amount, hence not putting the burden of

repayment of the loan on the customers family.

Who can take MLS?

Any Individual who is a customer of MMFSL or has taken the Vehicle Loan

& is between the age group of 18 to 59 can be covered under MLS. Any

other entity other than an individual cannot be covered under MLS. i.e. any

Firm, Trading Co., School, Institute, Trust, etc. cannot be covered

What is the scope of MLS cover?

MLS is the Pure Term Insurance Policy. MLS covers Pure Death cases only.

i.e. Only in case of death of the customer the claim can be processed for

recovering the Outstanding of the Loan.


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How does MLS work?

MLS Premium must be given according to the Tariff Card (Rate Card)

issued by the Insurance Company.

MLS policy if not commencement during the time of contract can be taken

out within the 3 months of the contract date. In case of the unfortunate death of the Customer the Principal outstanding of

the contract as on date of death is paid as the claim amount by the Insurance

Co. Based on the claim received by MMFSL, N.O.C. for the vehicle is

released by MMFSL to the Customers Family or Legal Hirers.

Premium Paying Option

1. Regular / Annual Premium

2. Single Premium

1. Regular / Annual Premium

The customer is covered only for one year

Cases covered under Regular Premium Option are supposed to be renewed

every year until the loan tenure of vehicle completes, so it needs to ensured

that the Regular / Annual Premium cases are renewed each year.

2. Single Premium


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The customer is covered for the entire loan tenure

Since it is covers the entire tenure of the contract, there is no need to renew it

Data Entry in MMFSL System Sarvanidhi

Once MLS Premium is collected the same needs to enter in the system in proper

Accounting Code. MLS Premium Collected with IHM is punched into A/c type

144 & premium collected without IHM i.e. after punching of the worksheet or

renewal is punched into A/c type 195.

Checklist Documents to be collected with MLS Premium collection

Age Proof School / College Leaving Certificate, PAN Card, Passport,

Driving License, Birth Certificate, Election ID Card, Letter from Gram

Panchayat / Municipal Authority on the letterhead stating age of the

customer.

Declaration of Good Health Form (DOGH) Compulsory to be signed by

the customer for every contract covered under MLS

Checklist Claim Intimation

Following details are required to intimate the claim to the Insurance Company


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HPA No. i.e. Agreement No.

Date of Death

Place of Death

Cause of Death Accidental or Natural

Checklist Claim Documentation Natural / Medical Death

MLS Premium Collected receipt

Worksheet Copy

Original Agreement Book Duly filled

Proposal Evaluation form (PEF)

Age Proof

Declaration of Good Health Form (DOGH)

Nominee details with complete proofs

Medical Report & Case History

Hospital Papers

Last Attended doctors certificate Mentioning cause of death

Original Death Certificate

Dos & Donts of MLS

Dos

Collect Premium as per Rate Card only


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All cases which are not covered under MLS at the time of commencement of

the contract can be covered within 3 months from the commencement of the

contract

Brief each & every customer about MLS at the time of FI

After the contract is made check with the customer whether he / she has paid

the MLS premium

Collect Age proof & DOGH in each & every case

Mention age in the worksheet as per the age proof

Maintain data of MLS cases done on a daily basis

Don'ts

Do not cover customer with age equal to & above 60 years

Do not collect short premium

Do not collect MLS Premium if the customer is other than Individual i.e.

school, Trust, etc.

Maximum cover amount for any customer under MLS is Rs.10 Lakh

Process note for MLS operations in the area

MMFSL / MIBL executive approach customers for the insurance products.

Advantages of the MLS & Disadvantages of not taking the MLS are

explained to the customer.

Mandatory documents as per check list & premium amount are collected

from the customer in favor of MIBL.


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Premium receipted is punched along with the Finance Contract in the

system at MMFSL branch.

Data of the customers who have paid the premium is extracted from the

system by MIBL at HO (Head Office).

Consolidated premium cheque is taken from MMFSL in favor of the

Insurance Company (Kotak Life Insurance) & the same are forwarded to the

insurance company by MIBL from the HO.

Cheque & Data of the customer to be covered is received & acknowledged

by the Insurance Company.

Blank certificate of cover is issued to MIBL by the Insurance Company.

MIBL receives the Blank Certificates & in turn prints certificate of cover &

sends to MMFSL branch.

MMFSL branch receives the certificate of cover & delivers the same to the

customer.

Finally customer receives the certificate of cover.

Motor Insurance

Motor Insurance (MI) is a Term Insurance policy. In simple words, MI protects

the Asset (Vehicle) cost of the Customer in case of unfortunate accident of the

vehicle during the tenure of the policy by covering the Asset cost, Owner, driver

& Passengers, but except the cost of asset all the others are covered under

Personal Accident Insurance Policy which is included in Motor Insurance. By

the help of MI the burden of cost incurred for repairing of the Asset is reduced.

Who can take Motor Insurance?


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Any person owing the vehicle which is registered in the RTO is

eligible for taking the Motor Insurance.

All the Auto Loan customers of MMFSL can take the Motor Insurance

from MIBL

Apart form the MMFSL customers all other having a vehicle can take

a Motor Insurance from MIBL

What is the scope of Motor Insurance cover?

MI is the Pure Term Insurance Policy. MI covers Pure Vehicle Accident cases

only. i.e. Only in case of Accident of vehicle the claim can be processed for

recovering the cost of repairs of the Vehicle.

How does Motor Insurance work?

MI Premium must be given according to the Tariff Card (Rate Card) issued


MI Premium also includes the premium of the Personal Accident Insurance

of Owner, Driver & Passengers.

MI policy is mandatory by RTO for ever vehicle running on the road. It is

also mandatory by each and every Finance company in both the case of

Refinance & New Business.


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In case of the unfortunate accident of the vehicle the cost for repairing of the

vehicle is given to the customer to the customer according to the slabs

decided by the insurance company for the various parts of the vehicle.

Slabs are below

Glass - 100%

Fiber Parts - 50%

Metal Body - 100%

(Note:-Current market value of the asset is considered as deprecation is charged

every year)

Premium Paying Option

There is only a single option of paying the premium in MI i.e. Annual premium.

Annual Premium

The Asset of the customer is covered only for one year

Cases covered under Annual Premium Option are supposed to be renewed

every year until the loan tenure of vehicle completes, so it needs to ensure

that the Regular / Annual Premium cases are renewed each year.

Checklist Documents to be collected with MI Premium collection


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Invoice for the New Vehicle & Valuation Report mention the current IDV of

the Used / Old vehicle

Registration Certificate and B ledger extract if demanded.

Policy of previous MI for receiving NCB in current premium

Photos of the vehicle & chaise print on paper with pencil in the case of

expiry of previous policy.

Checklist Claim Intimation

Following details are required to intimate the claim to the Insurance Company

Basically the Claim is to be registered on the Toll Free No of the Insurance

provided on the Cover Note / Policy

Inspection of the Spot is done in the Major Claim Cases

FIR is mandatory in the cases of Commercial Vehicle

Driving License of the Driver

Date of Accident

Place of Accident

Cause of Accident

No of Persons in the vehicle during the Accident

Checklist - Claim Documentation

MI Premium Collected receipt


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Policy or Cover Note in case of policy not been received

FIR in the cases of Commercial Vehicle

2 Witness of the Accident

Driving License of the Driver

Inspection Report of the Supervisor

Job Card & Estimate of repairing the asset

Photos & Video Recordings in the Case of Major Accident

Dos & Donts of MI

Dos

Collect Premium as per Rate Card only

All vehicles which are not covered under MI must be targeted & convinced

to renew the policy immediately.

Brief each & every customer about MI at the time of FI

After the contract is made check with the customer whether he / she has paid

the MI premium

Collect the RC & Invoice or Valuation Report

Maintain data of MI cases done on a daily basis

Generate the data of renewal cases and follow up must be given.

Don'ts

Do not collect short premium

Do not collect MI Premium for the vehicles which are not registered with

RTO.


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Do not increase the IDV of the Vehicle on demand of the Owner.

Process note for MI operations in the area

MMFSL / MIBL executive approach customers for the insurance products.

Advantages of the MI & Disadvantages of not taking the MI are explained to

the customer.

Mandatory documents as per check list & premium amount are collected

from the customer in favor of the MIBL.

Cover Note & Premium Receipt is issued to the customer which is valid for

90 days from the date of Premium Paid

Premium received in day is been paid to the concerned GIC & the copy of

cover note is also handed over to the employee of concerned GIC.

Cheque & Data of the customer to be covered is received & acknowledged


A Xerox copy of a cover note & premium receipt is sent to HO


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As we have a corporate Tie-Up with cholamandalam hence the brokerage is

directly transfer from GIC to MIBL account. But in the case of other GIC the

cheques of brokerage are received at local branch in the flavor of MIBL &

few days after the cheque of Service charge is also received, which are then

sent to HO from Local Branch

The original Policies of the MI are sent to the customer directly by the

register post by concerned GIC.

Finally customer receives the Policy certificate.

Your Suggestions for any improvements should be included in the process

note.

Our process is very good. We have built a better Brand Image in the minds of

our existing customers, but still we can improve our services. Suggestions for

improvement according to me are as follows:-

Insurance:

o MIBL employee must visit the customer on daily bases with the

collection executive.


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o Business executives must receive some rewards for giving the customers

o MLS must be made mandatory for all the contracts

o Service form MIBL team must be provided to the customer in settling the

claims.

o MIBL employees must not completely rely for business on MMFSL

employees i.e. Individual efforts must be made to generate more business

in the case of MI & Corporate Insurance.

o Corporate Insurance must be focused.

Mutual Funds:

o Though commissions are reduced on SIP, but still focusing on it will

increase our Cliental base.

o Our tractor customers with excellent repayment schedule must be

targeted as they are cash rich customers.

o The Business class customers taking the loan from MMFSL in between

Jan to Mar with IT returns must be targeted as they Cash rich Customers

but taking loan in order to take benefit of Deprecation in Income Tax.


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