SUMMER TRAINING PROJECT REPORT

ON

SALE OF SBI MUTUAL FUND PRODUCTS BY SBI V/S OTHER

PRIVATE BANKS

At

STATE BANK OF INDIA

SUBMITTED IN PARTIAL FULFILMENT FOR THE AWARD OF THE DEGREE

MASTER OF BUSINESS ADMINISTRATION

(FINANCIAL MARKETS) 2012-2014

Under the guidance of Assistant Professor

DR. SANCHITA BANSAL

SUBMITTED BY

SURAJ KUMAR KARN

ENROLLMENT NO.: 07116659312

UNIVERSITY SCHOOL OF MANAGEMENT STUDIES

(GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY)

Dwarka, Delhi

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DECLARATION

I hereby state that the Project Report titled “SALE OF SBI MUTUAL FUND PRODUCTS BY

SBI V/S OTHER PRIVATE BANKS ” submitted in partial fulfilment of the degree of Master

of Business Administration (Financial Markets) of Guru Gobind Singh Indraprastha

University, New Delhi is an original work done entirely by me and is based entirely on my own

observations. It has not previously formed the basis for the award of any other degree, diploma,

fellowship or any other similar title. The facts presented are true to the best of my knowledge.

SURAJ KUMAR KARN DATE:

Enrollment No. 07116659312

CERTIFICATE

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This is to certify that the Summer Training Report title “SALE OF SBI MUTUAL FUND

PRODUCTS BY SBI V/S OTHER PRIVATE BANKS” is an original work submitted by

SURAJ KUMAR KARN, Enrollment No. 07116659312, student of MBA (Financial Markets)

2012-2014, student of University School of Management Studies (USMS), Sector-16 C, Dwarka,

Delhi (INDIA) for the partial fulfilment of Master of Business Administration (Financial

Markets) program of Guru Gobind Singh Indraprastha University under the guidance of PROF.

DR. SANCHITA BANSAL and the same has not been submitted to any other University or

Institute for award of any Degree/ Diploma.

He has worked under my guidance and I wish him well in all her future endeavours’.

Signature

(Dr. Sanchita Bansal)

Assistant Professor

USMS, GGSIPU

Acknowledgement

Research is a venture that requires co-operation of many people. I feel pleasure in taking this opportunity to express my sincere regards to all the respondents, who helped me in achieving the

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objectives of my project. This project research could not have been possible without their dedication, patience, assistance and valuable time.

I would also like to thank my supervisor, Prof. SANCHITA BANSAL, New Delhi. Without her guidance, valuable suggestions, constructive criticisms and encouragement throughout the course of the project, the present shape of the work would not have been possible. I am also thankful to all teachers, non-teaching staff and all my friends of the institute for their kind help. And I am also thankful to my corporate guide and my mentor Mr. ASHOK KUMAR KATIYAL (REGIONAL MANAGER), RBO, Noida for their sincere guidance and inspiration in completing this project.

During the planning of this work the most difficult job was the stage of data collection. I want to convey my deepest regards to LALIT SINGH MAHAR, Relationship Manager at Noida, Sector-2 branch of SBI for his guidance and all the employees of STATE BANK OF INDIA, Noida. Without their help, data collection was impossible for the present study.

I am also extremely thankful to all those persons who have positively helped me and customers who responded my questionnaire, around whom the whole project cycle revolves.

I also thank all my friends who have more or less contributed to the preparation of this project report. I will be always indebted to them

EXECUTIVE SUMMARY

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The study on “SALE OF SBI MUTUAL FUND PRODUCTS BY SBI V/S OTHER PRIVATE

BANKS” has been taken at State Bank of India, at their sector 19 Noida Regional Business

Office, in their SBI MUTUAL FUND PVT.LTD branch. This project tries to understand the

brand SBI which has been established for quite a long time and how Bank can use that brand to

enhance its mutual fund market share. In India, there are many banks offering attractive and

viable mutual fund schemes. Among these, State Bank of India has emerged as the biggest player

in providing different mutual fund products.

The purpose of this study is to understand the brand of SBI and to study the sale of mutual

fund product by SBI and other private banks. And to understand what customers experienced

while taking mutual fund product from SBI and how SBI can enhance its market share of mutual

fund.

The several key areas of the research would be the study of the demographic characteristics of

the customers, analysis of the factors that determine their thought about SBI and their experience

of taking mutual fund and the hindrances caused by them while taking mutual fund.

TABLE OF CONTENTS

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Declaration

Industry Mentor Certificate

Summer Training Appraisal

Certificate of Completion

Acknowledgement

Executive Summary

Particulars Page No(s)

CHAPTER 1: INTRODUCTION

1.1 Introduction to Mutual Fund 8

1.2 Organisation of a Mutual Fund 10

1.3 Advantage of Mutual Fund 14

1.4 Disadvantage of Mutual Fund 15

1.5 Types of Mutual Fund Schemes 16

1.6 Various criteria to evaluate Mutual Fund 22

1.7 About SBI Mutual Fund 26

1.7.1 SBI – Mutual Fund Product 28

1.8 Channel of selling Mutual Funds 31

1.9 Objectives 37

1.10 SWOT Analysis of Mutual Fund 40

CHAPTER 2: RESEARCH DESIGN AND RESEARCH METHODOLOGY 42

2.1 Research Design

2.2 Research Methodology

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CHAPTER 3: COMPANY PROFILE 43

CHAPTER 4: DATA ANALYSIS AND INTERPRETATION 48

May month data of Noida Region

CHAPTER 5: QUESTIONAIRE & ITS INTERPRETATION 54

CHAPTER 6: RECOMMENDATION 66

CHAPTER 7: CONCLUSION 68

CHAPTER 8: BIBLIOGRAPHY 70

Chapter- 1

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Introduction

1.1 Introduction to Mutual Fund

An investment vehicle that is made up of a pool of funds collected from many investors for the

purpose of investing in securities such as stocks, bonds, money market instruments and similar

assets. Mutual funds are dynamic institution, which plays a crucial role in an economy by

mobilizing savings and investing them in the capital market, thus establishing a link between

savings and the capital market.

A mutual fund is an institution that invests the pooled funds of public to create a diversified

portfolio of securities. Pooling is the key to mutual fund investing. Each mutual fund has a

specific investment objective and tries to meet that objective through active portfolio

management.

Mutual fund as an investment company combines or collects money of its shareholders and

invests those funds in variety of stocks, bonds, and money market instruments. The latter

include securities, commercial papers, certificates of deposits, etc. Mutual funds provide the

investor with professional management of funds and diversification of investment.

Investors who invest in mutual funds are provided with units to participate in stock markets.

These units are investment vehicle that provide a means of participation in the stock market for

people who have neither the time, nor the money, nor perhaps the expertise to undertake the

direct investment in equities. On the other hand they also provide a route into specialist markets

where direct investment often demands both more time and more knowledge than an investor

may possess.

The price of units in any mutual fund is governed by the value of underlying securities. The

value of an investor’s holding in a unit can therefore, like an investment in share, can go down as

well as up. Hence it is said that mutual funds are subjected to market risk. Mutual fund cannot

guarantee a fixed rate of return. It depends on the market condition. If a particular scheme is

performing well then more return can be expected.

It also depends on the fund manager expertise knowledge. It is also seen that people invest in

particular funds depending on who the fund manager is.

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The following diagram shows the working of mutual fund

This diagram signifies the importance of Mutual Fund.

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 invested by the fund manager in different types of

securities depending upon the objective of the scheme. These could range from shares to

debentures to money market instruments. The income earned through these investments and the

capital appreciations realized by the schemes 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 person as it offers an

opportunity to invest in a diversified, professionally managed basket of securities at a relatively

low cost.

Since small investors generally do not have adequate time, knowledge, experience & resources

for directly accessing the capital market, they have to rely on an intermediary, which undertakes

informed investment decisions & provides consequential benefits of professional expertise.

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The advantage of Mutual Funds to the investors is professionally managed, low transaction cost,

liquidity, transparency, well regulated, diversified portfolios & tax benefits. By pooling their

assets through mutual funds, investors achieve economies of scale.

The portfolio diversification ensures risk minimization. The criticality of such a measure comes

in when you factor in the fluctuations that characterize stock markets. The interest of the

investors is protected by the SEBI, which acts as a watchdog. Mutual funds are governed by

SEBI (Mutual Funds) regulations, 1996.

1.2 ORGANISATION OF A MUTUAL FUNDThere are many entities involved and the diagram below illustrates the organizational set up of a

mutual fund:

Mutual funds have a unique structure not shared with other entities such as companies or firms.

It is important for employees & agents to be aware of the special nature of this structure, because

it determines the rights & responsibilities of the fund’s constituents viz., sponsors, trustees,

custodians, transfer agents & of course, the fund & the Asset Management Company(AMC) the

legal structure also drives the inter-relationships between these constituents.

The structure of the mutual fund India is governed by the SEBI (Mutual Funds) regulations,

1996. These regulations make it mandatory for mutual funds to have a structure of sponsor,

trustee, AMC, custodian. The sponsor is the promoter of the mutual fund,& appoints the trustees.

The trustees are responsible to the investors in the mutual fund, & appoint the AMC for

managing the investment portfolio. The AMC is the business face of the mutual fund, as it

manages all affairs of the mutual fund. The mutual fund & the AMC have to be registered with

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SEBI. Custodian, who is also registered with SEBI, holds the securities of various schemes of the

fund in its custody.

Sponsor:

The sponsor is the promoter of the mutual fund. The sponsor establishes the Mutual fund &

registers the same with SEBI. He appoints the trustees, Custodians & the AMC with prior

approval of SEBI, & in accordance with SEBI regulations. He must have at least five year track

record of business interest in the financial markets. Sponsor must have been profit making in at

least three of the above five years. He must contribute at least 40% of the capital of the AMC.

Trustees:

The Mutual Fund may be managed by a Board of trustees of individuals, or a trust company – a

corporate body. Most of the funds in India are managed by board of trustees. While the board of

trustees is governed by the provisions of the Indian trust act, where the trustee is the corporate

body, it would also be required to comply with the provisions of the companies act, 1956. the

board of trustee company, as an independent body, act as protector of the unit-holders interest.

The trustees don’t directly manage the portfolio of securities. For this specialist function, they

appoint an AMC. They ensure that the fund is managed by AMC as per the defined objectives &

in accordance with the trust deed & SEBI regulations.

Asset Management Company(AMC):

The role of an Asset management companies is to act as the investment manager of the trust.

They are the ones who manage money of investors. An AMC takes decisions, compensates

investors through dividends, maintains proper accounting & information for pricing of units,

calculates the NAV, & provides information on listed schemes. It also exercises due diligence on

investments & submits quarterly reports to the trustees. AMCs have been set up in various

countries internationally as an answer to the global problem of bad loans.

Bad loans are essentially of two types: bad loans generated out of the usual banking operations or

bad lending, and bad loans which emanate out of a systematic banking crisis.

It is in the latter case that banking regulators or governments try to bail out the banking system of

a systematic accumulation of bad loans which acts as a drag on their liquidity, balance sheets and

generally the health of banking. So, the idea of AMCs or ARCs is not to bail out banks, but to

bail out the banking system itself.

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Types of AMCs in Indian Context:

The following are the various types of AMCs we have in India:

AMCs owned by banks.

AMCs owned by financial institutions.

AMCs owned by Indian private sector companies.

AMCs owned by foreign institutional investors.

AMCs owned by Indian & foreign sponsors.

Custodian:

Often an independent organization, it takes custody all securities & other assets of mutual fund.

Its responsibilities include receipt & delivery of securities collecting income-distributing

dividends, safekeeping of the unit & segregating assets & settlements between schemes.

Mutual fund is managed either trust company board of trustees. Board of trustees & trust are

governed by provisions of Indian trust act. If trustee is a company, it is also subject Indian

Company Act. Trustees appoint AMC in consultation with the sponsors & according to SEBI

regulation. All mutual fund schemes floated by AMC have to be approved by trustees. Trustees

review & ensure that net worth of the company is according to stipulated norms, every quarter.

Though the trust is the mutual fund, the AMC is its operational face. The AMC is the first

functionary to be appointed, & is involved in appointment of all other functionaries. The AMC

structures the mutual fund products, markets them & mobilizes fund, manages the funds &

services to the investors.

A draft offer document is to be prepared at the time of launching the fund. Typically, it pre-

specifies investment objectives of the fund, the risk associated, the cost involved in the process

& the broad rules to enter & to exit from the fund & other areas of operation. In India as in most

countries, these sponsors need approval from a regulator, SEBI in our case. SEBI looks at track

records of the sponsor & its financial strength granting approval to the fund for commencing

operations.

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A sponsor then hires an asset management company to invest the funds according to the

investment objective. It also hires another entity to be the custodian of the assets of the fund &

perhaps the third one to handle registry work for the unit holder of the fund.

Registrars & Transfer Agent(R & T Agent):

The Registrars & Transfer Agents(R & T Agents) are responsible for the investor servicing

function, as they maintain the records of investors in mutual funds. They process investor

applications; record details provide by the investors on application forms; send out to investors

details regarding their investment in the mutual fund; send out periodical information on the

performance of the mutual fund; process dividend payout to investor; incorporate changes in

information as communicated by investors; & keep the investor record up-to-date, by recording

new investors & removing investors who have withdrawn their funds.

SEBI – Securities and Exchange Board of India:

Securities and Exchange Board of India (SEBI) is a board (autonomous body) created by the

Government of India in 1988 and given statutory form in 1992 with the SEBI Act 1992 with its

head office at Mumbai.

The Securities and Exchange Board of India is perhaps the most important regulatory body.

Similar to the Securities Exchange Commission in the US, it is the authority that has to always

be on its toes. More so, when the markets are doing well and there are a spate of IPOs (initial

public offerings) or FPO’s (follow-on public offerings) like now.

Its main mandate is to protect the interest of investors in the securities markets and to promote

the development of and to regulate the securities markets so as to establish a dynamic and

efficient securities market.

When investors have complaints against listed companies or registered intermediaries, and if

they are not solved directly between the parties concerned, or if the investor is not happy with the

response then SEBI acts as the nodal agency for addressing these complaints.

SEBI has listed certain categories of grievances for which investors can file complaints with it.

These include:

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Non-receipt of refund order or allotment advice in case of investment in IPO's, FPO's and

rights issues

Non-receipt of dividend from listed companies

Non-receipt of share certificates after transfer from listed companies

Non-receipt of debentures after transfer or non-receipt of interest or principal on

redemption and non-receipt of interest on delayed repayment

Non-receipt of rights offer letter

1.3 ADVANTAGES OF MUTUAL FUND

S. No.

Advantage Particulars

1.Portfolio Diversification

Mutual Funds invest in a well-diversified portfolio of securities which enables investor to hold a diversified investment portfolio (whether the amount of investment is big or small).

2.Professional Management

Fund manager undergoes through various research works and has better investment management skills which ensure higher returns to the investor than what he can manage on his own.

3. Less RiskInvestors acquire a diversified portfolio of securities even with a small investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities.

4.Low Transaction Costs

Due to the economies of scale (benefits of larger volumes), mutual funds pay lesser transaction costs. These benefits are passed on to the investors.

5. LiquidityAn investor may not be able to sell some of the shares held by him very easily and quickly, whereas units of a mutual fund are far more liquid.

6.Choice of Schemes

Mutual funds provide investors with various schemes with different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. These schemes further have different plans/options

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7. TransparencyFunds provide investors with updated information pertaining to the markets and the schemes. All material facts are disclosed to investors as required by the regulator.

8. Flexibility

Investors also benefit from the convenience and flexibility offered by Mutual Funds. Investors can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes.

9. SafetyMutual Fund industry is part of a well-regulated investment environment where the interests of the investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.

1.4 Disadvantage of Investing Through Mutual Funds

S. No.

Disadvantage Particulars

1.Risk Association

Risk is associated while investing in mutual fund.

2. No assurance Mutual funds, although regulated by the government, are not insured against losses.

3.

Difficulty in Selecting a Suitable Fund Scheme

Many investors find it difficult to select one option from the plethora of funds/schemes/plans available. For this, they may have to take advice from financial planners in order to invest in the right fund to achieve their objectives.

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1.5 TYPES OF MUTUAL FUND SCHEMES:

By Structure

o Open-ended schemes

o Close-ended schemes

o Interval schemes

By Investment Objective

o Growth schemes

o Income schemes

o Balance schemes

o Money Market schemes

Other types of schemes

Tax Saving schemes

Special schemes

Index schemes

Sector specific schemes

Schemes according to maturity period:

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme

depending on its maturity period.

Open-ended Fund / Scheme

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An open-ended fund or scheme is one that is available for subscription and repurchase on a

continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently

buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis.

The key feature of open-end schemes is liquidity.

Close-ended Fund / Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open

for subscription only during a specified period at the time of launch of the scheme. Investors can

invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the

units of the scheme on the stock exchanges where the units are listed. In order to provide an exit

route to the investors, some close-ended funds give an option of selling back the units to the

mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that

at least one of the two exit routes is provided to the investor i.e. either repurchase facility or

through listing on stock exchanges. These mutual funds schemes disclose NAV generally on

weekly basis.

Interval scheme

Interval funds combine the features of open-ended & closed ended schemes. They are open for

sale or redemption during pre-determined intervals at NAV related prices.

Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or balanced scheme

considering its investment objective. Such schemes may be open-ended or close-ended schemes

as described earlier. Such schemes may be classified mainly as follows:

Growth / Equity Oriented Schemes

The 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.

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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.

Income / Debt Oriented Scheme

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.

Balanced Fund

The aim of balanced funds is to provide both growth and regular income as such schemes invest

both in equities and fixed income securities in the proportion indicated in their offer documents.

These are appropriate for investors looking for moderate growth. They generally invest 40-60%

in equity and debt instruments. These funds are also affected because of fluctuations in share

prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared

to pure equity funds.

Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy liquidity, preservation of

capital and moderate income.

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These schemes invest exclusively in safer short-term instruments such as treasury bills,

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

Returns on these schemes fluctuate much less compared to other funds. These funds are

appropriate for corporate and individual investors as a means to park their surplus funds for short

periods.

Other Schemes

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act,

1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity

Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax

benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth

opportunities and risks associated are like any equity-oriented scheme.

Gilt Fund

These funds invest exclusively in government securities. Government securities have no default

risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic

factors as is the case with income or debt oriented schemes.

Index Funds

Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P

NSE 50 index (Nifty), etc these schemes invest in the securities in the same weight age

comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or

fall in the index, though not exactly by the same percentage due to some factors known as

"tracking error" in technical terms. Necessary disclosures in this regard are made in the offer

document of the mutual fund scheme.

There are also exchange traded index funds launched by the mutual funds which are

traded on the stock exchanges.

Sector specific funds / schemes

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Risk

Money Market FundsFloaters

Income FundsGilt Funds

MIPsBalanced Funds

Diversified Equity FundsR

eturns

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 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.

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1.6 VARIOUS CRITERIA TO EVALUATE THE MUTUAL FUNDS

The most important and widely used measures of performance are:-

Basic criterions to evaluate the mutual fund schemes

P/E ratio

Turnover ratio

Expense ratio

Standard deviation

P/E Ratio

A valuation ratio of a company's current share price compared to its per-share earnings.

(EPS).

Calculated as:

EPS is the profit that a company makes on a per share basis. So, if EPS is one, the PE ratio will

reflect the price that an investor will pay for this one rupee of the company's profits. Higher PE

ratio signifies that investor expectation from these shares is higher. This is because the growth in

share price is expected to follow earnings growth.

In general, a high P/E suggests that investors are expecting higher earnings growth in the future

compared to companies with a lower P/E. However, the P/E ratio doesn't tell us the whole story

by itself. It's usually more useful to compare the P/E ratios of one company to other companies

in the same industry, to the market in general or against the company's own historical P/E.

Turnover Ratio

The turnover ratio is the lower of the total sales or total purchases over the period divided by the

average of the net assets. Higher the turnover ratio, greater is the volume of trading carried out

by the fund.

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The turnover ratio is more important for equity and balanced funds where the trading cost of

equities is substantial. So, each time a fund manager buys and sells, he has to keep in mind that

the cost of buying and selling will eat into the fund's returns. Dynamic equity funds, which can

move rapidly between sectors, will obviously have a higher turnover ratio. Here risk will not be

just of the fund manager making a wrong call on a sector but also that of 51turnover risk. In

comparison a passively managed fund, such as an index fund, will have a lower turnover rate

compared to an active fund as it has to just mirror the index. The only trading here will be due to

investments, redemptions and changes in the index. Also, it is not meaningful to use turnover

ratio for new schemes, which are not fully invested. As the scheme is deploying its assets there

will be more transactions, at least buy orders, as compared to a fund` which is fully invested.

Turnover ratio is less relevant for income funds as brokerage costs are much lower, and hence

they will have a lower potential to eat into returns. So, even though gilt funds may have equally

high turnover as compared to equity funds, the impact of this turnover is much less.

In Short, Turnover ratio is a measure of how a fund's portfolio changes in a year. This ratio

indicates how much a fund is trading. Understanding turnover ratio helps in gaining insights into

a fund's performance.

Expense Ratio

Expense ratio is the percentage of total assets that are spent to run a mutual fund. As returns from

bond funds tend to be similar, expenses become an important factor while comparing bond

funds.

SHARPE RATIO

St= Rp-R

S. D.

WHERE

Rp – Avereage return to portfolio

Rf—Risk free rate of interest

S.D- Standard Deviation

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Sharpe’s performce index gives a single value to be used for the performance ranking of various

funds or portfolios. Sharpe index measures the risk premium of the portfolio relative to the total

amount of risk in the portfolio. The risk premium is the difference between the portfolio’s

average rate of return and the risk less rate of return. The standard deviation of the portfolio

indicates the risk.

Higher the value of sharpe ratio better the fund has performed. Sharpe ratio can be used to rank

the desirability of funds or portfolios. The fund that has performed well comapred to other will

be ranked first then the others.

TREYNOR RATIO

Ty= Rp—Rf

B

WHERE

Rp- Average return to portfolio

Rf- Risk less rate of interest.

B- Beta coeffecient

Treynor ratio is based on the concept of characteristic line. Characteristic line gives the relation

between a given market return and fund’s return. The fund’s performance is measured in relation

to market performance. The ideal fund’s return rises at a faster rate than the market performance

when the market is moving upwards and its rate of return declines slowly than the market return,

in the decline.

Treynor’s risk premium of the portfolio is the difference between the aveage return and the risk

less rate of return. The risk premium depends on the systematic risk assumed in a portfoilo.

Standard Deviation

Standard Deviation is the most common statistical measure of judging a fund's volatility and risk.

It gives you a 'quality rating' of an average.

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A measure of the total volatility of a fund is based on the trailing three-year monthly returns. For

debt and gilt funds it is based on average weekly return over the past one and a half years.

The Standard Deviation of an average is the amount by which the numbers that go into an

average deviate from that average. It tells us how closely an average represents the underlying

numbers. A high Standard Deviation may be a measure of volatility, but it does not necessarily

mean that such a fund is worse than one with a low Standard Deviation. If the first fund is a

much higher performer than the second one, the deviation will not matter much.

BETA

Beta describes the relationship between the stock’s return and index returns. There can be direct

or indirect relation between stock’s return and index return. Indirect relations are very rare.

Beta =+1.0

It indicates that one percent change in market index return causes exactly one percent change in

the stock return. It indicates that stock moves along with the market.

Beta= + 0.5

One percent changes in the market index return causes 0.5 percent change in the stock return. It

indicates that it is less volatile compared to market.

Beta=2.0

One percent change in the market index return causes 2 percent change in the stock return. The

stock return is more volatile. The stocks with more than 1 beta value are considered to be very

risky.

1) Negative beta value indicates that the stocks return move in opposite direction to the

market return.

Beta= N*∑XY- (∑X) (∑Y/ N(X*X) * (∑x)

Where

N- No of observation

X- Total of market index value

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Y- Total of return to Nav

NAV

Net Asset Value or NAV of a mutual fund is the value of one unit of investment in the fund, in

net asset terms.

NAV = Net Assets of the scheme / Number of Units Outstanding

Where Net Assets are calculated as:-

(Market value of investments + current assets and other assets + Accrued income – current

liabilities and other liabilities – less accrued expenses) / No. of Units Outstanding as at the NAV

date

1.7About SBI MUTUAL FUND

STATE BANK OF INDIA - MUTUAL FUND - A partner for life

SBI Mutual Fund (SBI MF) is one of the largest mutual funds in the country with an investor

base of over 4.6 million. With over 20 years of rich experience in fund management, SBI MF

brings forward its expertise in consistently delivering value to its investors

Proven Skills in wealth generation:

SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable track record

in judicious investments and consistent wealth creation.

The fund traces its lineage to SBI - India’s largest banking enterprise. The institution has grown

immensely since its inception and today it is India's largest bank, patronized by over 80% of the

top corporate houses of the country.

SBI Mutual Fund is a joint venture between the State Bank of India and Société General Asset

Management, one of the world’s leading fund management companies that manages over US$

500 Billion worldwide.

Exploiting expertise, compounding growth:

26

In twenty years of operation, the fund has launched 38 schemes and successfully redeemed

fifteen of them. In the process it has rewarded it’s investors handsomely with consistently high

returns.

A total of over 60 lakh investors have reposed their faith in the wealth generation expertise of

the Mutual Fund.

Schemes of the Mutual fund have consistently outperformed benchmark indices and have

emerged as the preferred investment for millions of investors and HNI’s.

Today, the fund manages over Rs. 51,461 crores of assets and has a diverse profile of investors

actively parking their investments across 37 active schemes.

The fund serves this vast family of investors by reaching out to them through network of over

130 points of acceptance, 29 investor service centers, 55 investor service desks and 45 district

organizers.

SBI Mutual is the first bank-sponsored fund to launch an offshore fund – Resurgent India

Opportunities Fund.

Growth through innovation and stable investment policies is the SBI MF credo.

Fund house expertise:

The investment environment is becoming increasingly complex. Innumerable parameters need to

be factored in to generate a clear understanding of market movement and performance in the

near and long term future.

At SBIMF, we devote considerable resources to gain, maintain and sustain our profitable insights

into market movements. We consistently push the envelope to ensure our investors get the

maximum benefits year after year.

Research - the backbone of our Performance

Our expert team of experienced and market savvy researchers prepare comprehensive analytical

and informative reports on diverse sectors and identify stocks that promise high performance in

the future.

This team works in tandem with a compliance and risk-monitoring department, which ensures

minimization of operational risks while protecting the interests of the investors.

27

Quite naturally many of our equity funds have delivered consistent returns to investors and have

repeatedly out performed benchmark indices by wide margins.

Risk Management Team:

The Risk Management unit is a separate division within the organization headed by the Chief

Risk Officer (CRO). A Risk Management Committee, comprising the MD, Deputy CEO, CRO,

COO, CIO and the CMO meets on a regular basis to manage risk within the organization.

The CRO is responsible for risk management over all the functions within the organization

including Investments, Marketing, Operations, etc. Currently, the CRO is an experienced

investment professional and is assisted by a two-member team, one being an investment

Professional with an MBA in Finance and the other being an investment professional deputed

from SGAM.

1.7.1 SBI- MUTUAL FUND PRODUCTS:

EQUITY SCHEMES:

The investments of these schemes will predominantly be in the stock markets and endeavor will

be to provide investors the opportunity to benefit from the higher returns which stock markets

can provide. However they are also exposed to the volatility and attendant risks of stock markets

and hence should be chosen only by such investors who have high risk taking capacities and are

willing to think long term. Equity Funds include diversified Equity Funds, Sectoral Funds and

Index Funds. Diversified Equity Funds invest in various stocks across different sectors while

Sectoral funds which are specialized Equity Funds restrict their investments only to shares of a

particular sector and hence, are riskier than Diversified Equity Funds. Index Funds invest

passively only in the stocks of a particular index and the performance of such funds move with

the movements of the index.

Magnum COMMA Fund

28

Magnum Equity Fund

Magnum Global Fund

Magnum Index Fund

Magnum MidCap Fund

Magnum Multicap Fund

Magnum Multiplier Plus 1993

Magnum Sector Funds Umbrella

   MSFU - FMCG Fund

          MSFU - Emerging Businesses Fund

          MSFU - IT Fund

          MSFU - Pharma Fund

         MSFU - Contra Fund

SBI Arbitrage Opportunities Fund

SBI Blue chip Fund

SBI Infrastructure Fund - Series I

SBI Magnum Taxgain Scheme 1993

SBI ONE India Fund

SBI TAX ADVANTAGE FUND - SERIES I

DEBT SCHEMES:

Debt Funds invest only in debt instruments such as Corporate Bonds, Government Securities and

Money Market instruments either completely avoiding any investments in the stock markets as in

Income Funds or Gilt Funds or having a small exposure to equities as in Monthly Income Plans

or Children's Plan. Hence they are safer than equity funds. At the same time the expected returns

29

from debt funds would be lower. Such investments are advisable for the risk-averse investor and

as a part of the investment portfolio for other investors.

Magnum Children’s Benefit Plan

Magnum Gilt Fund

  Magnum Gilt Fund (Long Term)

         Magnum Gilt Fund (Short Term)

Magnum Income Fund

Magnum Income Plus Fund

  Magnum Income plus Fund (Saving Plan)

         Magnum Income plus Fund (Investment Plan)

Magnum Insta Cash Fund

Magnum InstaCash Fund -Liquid Floater Plan

Magnum Institutional Income Fund

Magnum Monthly Income Plan

Magnum Monthly Income Plan Floater

Magnum NRI Investment Fund

SBI Capital Protection Oriented Fund - Series I

SBI Debt Fund Series

   SDFS 15 Months Fund

         SDFS 90 Days Fund

         SDFS 13 Months Fund

         SDFS 18 Months Fund

         SDFS 24 Months Fund

30

         SDFS 30 DAYS

         SDFS 30 DAYS

         SDFS 60 Days Fund

         SDFS 180 Days Fund

          SDFS 30 DAYS

SBI Premier Liquid Fund

SBI Short Horizon Fund

   SBI Short Horizon Fund - Liquid Plus Fund

         SBI Short Horizon Fund - Short Term Fund

BALANCED SCHEMES:

Magnum Balanced Fund invests in a mix of equity and debt investments. Hence they are less

risky than equity funds, but at the same time provide commensurately lower returns. They

provide a good investment opportunity to investors who do not wish to be completely exposed to

equity markets, but is looking for higher returns than those provided by debt funds.

Magnum Balanced Fund

Magnum NRI Investment Fund - Flexi Asset Plan

1.8 CHANNELS OF SELLING MUTUAL FUNDS Mutual funds are emerging as an important financial intermediary for the investing public in

India. Conceptually and operationally they are different. The investors need to understand the

working of a mutual fund and the increasingly diverse and complex investment options brought

to them by a large number of mutual funds. The key channel in bringing the mutual funds to a

large number of investors all over the country is the network of

31

INTERMEDIARIES/DISTRIBUTORS. In this industry we have five different channels through

which mutual fund are sold:

• Mutual Fund Company

• National Distributors (NDs) & Intermediaries

• Banks

• Individual Financial Advisors (IFAs)

• Internet

Each one has its own customer base. Their way of dealing with them is totally different from

other. Every one attracts in their own way. How they attract we will study. There are many

industries here. The urgency to keep increasing in size has led mutual funds to use marketing

hooks to draw investors. As we rely only on channel partners, our relation with them really is

going to play a vital role. How different companies lure the partners, we’ll study that. As to start

with we will first study about the intermediaries in brief by describing who they are and how

they help a direct investor.

Mutual Fund Office:

Anyone can walk into a mutual fund’s office, and buy/sell units of its schemes. It’s a simple

process, and there are employees of the fund house on hand to guide you through. If you are

buying units, you will have to fill up an application form and hand over a cheque equivalent to

your investment. The fund house will give you an acknowledgement of your investment in its

scheme(s) and subject to your cheque being cleared, send you an account statement within three

to seven days. Since a fund house market only its schemes and not those of its competitors,

buying directly means knowing which fund house we want to invest in. If we are selling units,

the relevant document is the redemption form, which sometimes forms part of your account

statement and can be torn off it, or can be had from the fund house’s office. The fund house

mails the cheque within three days. The problem with transacting through fund house is that they

have a very thin presence. Most fund houses have just an office or two in the big cities;

moreover, since such offices are located in the central business district, for most investors, this

means travelling a fair distance. It’s worse in smaller centres-only a few fund houses have a

32

scattered presence. But as the industry grows and gains greater investor acceptance. Mutual

funds are bound to expand beyond cities.

Intermediaries:

Distributors such as agents, banks and stockbrokers are present in much greater numbers, which

makes them the preferred option among investors. While dealing with the intermediaries, make

sure they have the AMFI (Association of Mutual Fund in India) certification-a SEBI

precondition; since September 2003, for selling mutual funds, intended t ensure that only

qualified distributors dispense mutual fund advice. AMFI issues photo identity cards to

registered intermediaries, which is proof of their having acquired the certification.

National Distributors

The big agents are one-stop sellers of financial products. Agents score over mutual funds on

convenience, choice and quality of service. They operate from multiple locations-for example,

national distributors like Bajaj Capital has more outlets than most mutual funds-and are

supported by an army of registered agents, some of whom are willing to come to our doorstop

and sell schemes to you. Further, while a mutual fund offer its schemes, a big agent has the

biggest stock among all mutual fund sellers, selling virtually all schemes of virtually every fund

house, as well as other investment products. For us, this means more choice. If we know the

scheme we want to invest in, go to an agent, fill up the scheme’s form and give in a cheque.

Even if we don’t know which scheme we want to invest in, a good agent will understand our

need and help you pick a scheme. The agent should understand our reasons for investing in a

mutual fund and based on that offer us appropriate options, and let us make a choice. An agent is

supposed to be impartial and not show a preference towards a particular fund house. The very

nature of the relationship between an intermediary and fund houses opens up the possibility of

bias. Fund houses pay intermediaries a commission linked to the business they bring in. If fund

house X pays a higher commission than fund house Y, an intermediary might push scheme X, as

it stands to earn more. How do we know that we are being misguided or not? The entry load

charged by a scheme can offer us some clues. The entry load represents the upfront costs an

investor pays to invest in a scheme, and the agent’s commission tends to flow out of it. The

higher the entry load, chances are, the higher the agent’s commission. If the agent is pushing the

higher load scheme, perhaps he is more interested in maximizing his commission than our

returns. Hence always know the entry load being charged by a scheme. Till mid 2002,

intermediaries passed on a part of their commission to investors, as an incentive to invest. The

33

they got form the fund house, the more they passed on to investors. This often created an

unhealthy situation, where cash incentives, and not investment-worthiness, determined which

scheme, an agent recommended. In June 2002, to stop such abuse, SEBI made it illegal for

intermediaries to give money and gifts to investors. Although intermediaries can’t lure you with

money now (legally speaking that is), their commission-based earnings structure means a

distributor could still be a partial to a fund house. Which is why, listen to what an intermediary to

say but also do the homework, and use your judgement to make an informed decision.

For example:- (Figures in crore.)

a) Frontline Securities Ltd.

Closing Asset in Sbimf - 38.2

Closing Asset in Industry – 9479.20

b) ICICI Securities Ltd.

Closing Asset in Sbimf - 272.4

Closing Asset in Industry – 2920.4

C) Bajaj Capital Ltd.

Closing Asset in Sbimf – 415.9

Closing Asset in Industry – 2901.6

Banks

A number of banks, especially the private and foreign ones, are into marketing the mutual fund

schemes. Many of them market not only their own schemes, but also those of their rivals as a

point of purchase; banks are a good option because of their fantastic reach-banks can be founded

in every neighborhood. This wide reach has enabled banks to emerge as a major distributor. In

1999, barely 10 percent of fresh mutual fund sales were made through banks; during 2003,

various estimates put the share of banks in mutual fund sales at between 30 percent and 50

percent. In terms of scope of service, banks are a notch below agents. Whatever your profile or

investment amount might be, an agent will offer you personalized service-he will listen to your

investment needs, offer you information on various schemes as asked by you, and suggest

investment options. However, typically a bank will not give you this option or attention, unless

34

you are a big money client and subscribe to its wealth management services. What banks will do,

unconditionally, is help you through the investment formalities like filling up a form and offering

basic information. But things are changing and banks are also giving personalized service to its

retail investors also.

Individual Financial Advisors (IFA)

Big brokers combine the attributes of agents (one-stop shop, personalized service) and banks (a

team of analyst who crack the mutual fund industry). This service, though usually comes at a

cost, and is reserved for their clients. Small brokers, on the other hand, welcome retail investors,

but most of them market schemes of select fund houses only. These are independent

professionals trained to advice you on all personal finance matters. They all sell financial

products, as agents currently do. Unlike agents, though, CFPs might charge you for their

services.

Some of IFA are as follows:

a) Yogesh Kumar Bhatia

Closing Assets in Sbimf – 26.8

Closing Assets in Industry – 1236

b) Vimal Agrawal

Closing Assets in Sbimf – 0

Closing Assets in Industry – 2603.20

c) Deepanshu Singhal

Closing Assets in Sbimf – 50.5

Closing Assets in Industry – 2584.20

d) Manoj Shrivastva

Closing Assets in Sbimf – 28

Closing Assets in Industry – 2266.30

35

The Internet

At present, around 3 percent of mutual fund transactions are done online. This figure is bound to

increase, with better Net connectivity are also expected to tie up with more banks, which will

bring more investors into the loop.The other move that will provide a fillip to online transactions

to be supplemented by physical documentation. At present, some fund houses enable buying-and

in some instances, selling on three platforms:

1. Own websites-- Most of the mutual fund houses let you buy and sell the units of their

schemes through their websites. All you need is a Net banking account with any of the banks the

fund houses have tied up with. You log on to the fund’s site, choose your scheme and investment

amount. A link on the website takes you to the website of the designated bank, where you make

your payment.

Money is transferred from your Net banking account to the mutual fund and units are allotted to

you instantaneously. The transaction is also documented in the physical form-the fund houses

send you the application form to sign, and send back. Once you have done an online transaction

with a fund house, you can open an online account with it. This will enable you to sell your

holdings, switch between the schemes and purchase additional units-at the click of a mouse.

2. Financial Portals-- You can also buy units of several mutual funds through financial portals

as myiris.com, timesofmoney.com and indiainfoline.com among others. The process and

requirements are similar to that of for buying through the fund’s site. However, most portals

enable only purchase.

3. Online trading portals-- Share trading portals like ICICI Direct (icicidirect.com) and

Sharekhan (sharekhan.com) too offer a fair number of mutual fund schemes on their platforms.

Registered user can buy or sell their units on offer, just like a stock-at no extra cost.

Following Banks sell following mutual fund product of SBI

1) HDFC

Equity Fund

Balanced Fund

Index Fund

36

Inst. Cash Fund

Monthly Income Plan

2) Citi Bank

Sbi Dynamic Bond

3) Kotak Mahindra Bank

Emerging Business fund

Equity fund

4) Axis Bank

FMCG Fund

Balanced fund

Income fund

5) ICICI

Emerging Business fund

Mangnum Income Fund

Top going Private Banks in Mutual fund

I. HDFC

II. CITI BANK

III. KOTAK & ICICI

IV. AXIS

1.9 OBJECTIVES

To know about SBI Mutual Fund.

To know about different products of SBI Mutual fund.

To know about how the products are actually traded through mutual

fund.

To know the different sources or channel through which products are

traded in SBI Mutual Fund.

37

To know the contribution made by different sources or channels to

promote SBI Mutual Fund.

Assets under management (Rs.Cr)

Mutual FundsMarch 2013 June 2013  Change %

Change

 

HDFC Mutual Fund  101,720 104,977 3,257 3.20  

Reliance Mutual Fund  94,580 97,771 3,191 3.37  

ICICI Prudential Mutual Fund 

87,835 91,695 3,860 4.39  

Birla Sun Life Mutual Fund  77,046 79,761 2,714 3.52  

UTI Mutual Fund 69,450 74,707 5,256 7.57  

SBI Mutual Fund  54,905 59,163 4,258 7.75  

Franklin Templeton Mutual Fund 

41,564 41,722 158 0.38  

IDFC Mutual Fund  32,886 38,938 6,052 18.40  

Kotak Mahindra Mutual Fund 

35,361 37,203 1,842 5.21  

DSP BlackRock Mutual Fund 

32,342 33,041 699 2.16  

Tata Mutual Fund  19,897 20,883 986 4.95  

Deutsche Mutual Fund 18,114 18,563 449 2.48  

38

Sundaram Mutual Fund 14,871 15,459 588 3.95  

JPMorgan Mutual Fund 15,856 14,883 -972 -6.13  

Religare Invesco Mutual Fund 

14,202 13,811 -391 -2.75  

L&T Mutual Fund  11,169 13,782 2,612 23.39  

Axis Mutual Fund 12,114 12,289 175 1.44  

Canara Robeco Mutual Fund 8,851 7,193 -1,658 -18.73  

Baroda Pioneer Mutual Fund 7,303 7,140 -163 -2.23  

LIC NOMURA Mutual Fund 7,185 6,818 -367 -5.10  

JM Financial Mutual Fund 7,411 6,755 -657 -8.86  

HSBC Mutual Fund 5,230 5,891 661 12.63  

IDBI Mutual Fund 6,249 5,489 -760 -12.16  

PRINCIPAL Mutual Fund 5,573 4,849 -725 -13.01  

Peerless Mutual Fund 4,875 4,538 -336 -6.90  

Taurus Mutual Fund 4,732 4,464 -267 -5.65  

Goldman Sachs Mutual Fund 4,800 4,309 -490 -10.22  

BNP Paribas Mutual Fund 3,726 3,841 115 3.08  

Indiabulls Mutual Fund 2,639 3,219 580 21.97  

Morgan Stanley Mutual Fund 2,660 3,022 361 13.59  

39

Pramerica Mutual Fund 2,592 2,544 -48 -1.86  

Union KBC Mutual Fund 3,118 2,477 -641 -20.55  

PineBridge Mutual Fund 1,099 1,206 107 9.75  

ING Mutual Fund 993 891 -102 -10.26  

BOI AXA Mutual Fund 1,104 866 -238 -21.54  

Mirae Asset Mutual Fund 540 524 -16 -3.00  

Motilal Oswal Mutual Fund 539 491 -47 -8.76  

Quantum Mutual Fund  280 292 12 4.23  

Escorts Mutual Fund 255 268 13 5.01  

Sahara Mutual Fund 254 244 -10 -3.76  

Edelweiss Mutual Fund  259 239 -20 -7.62  

IIFL Mutual Fund 210 214 5 2.18  

Daiwa Mutual Fund 266 131 -135 -50.64  

Total 816,657 846,563 29,906 3.53  

1.10 SWOT Analysis of Mutual Fund

Strength:-

Portfolio Diversification

Professional Management

Less Risk

40

Low Transaction Costs

Choice of Scheme

Flexibility

Weakness:-

Risk Association

No assurance

Difficulty in Selecting a Suitable Fund Scheme

Opportunities:-

Good rate return

High liquidity

Investment diversification

Threats:-

Portfolio creation problem

Over Diversification problem

Asset allocation Problem

Valuation Analysis problem

Long Bias problem

41

CHAPTER-2

RESEARCH DESIGN and RESEARCH METHODOLOGY

2.1 RESEARCH DESIGN

The research design employed for the research involves numbers, so it becomes “Quantitative

Research” which refers to the systematic empirical investigation of social phenomena via

statistical, mathematical or computational techniques. The objective of quantitative research is to

develop and employ mathematical models, theories pertaining to that phenomenon. The process

of measurement is central to quantitative research because it provides the fundamental

connection between empirical observation and mathematical expression of quantitative

relationships. Quantitative data is any data that is in numerical form such as statistics,

percentages etc.

The research is also “Descriptive” in nature. Descriptive research refers to the data and

characteristics about the population being studied.

2.2 Research Methodology:

The research consists of primary data, which means the data collected is first hand in

nature. The method for the collection of primary data was by means of questionnaires designed

which were distributed to many individuals across Noida. The questionnaire was designed and

analyzed into 2 parts. The questionnaire was prepared using some part of opened ended with

maximum of close-ended questions for the generation of the experiences encountered by the

customers. The secondary data for the research was collected from various journals , research

papers and internet. The area of study for this particular project is limited to Noida Region and

for this very purpose, only four commercial bank named ICICI, RELIANCE, HDFC, CITI

BANK, KOTAK MAHINDRA have been selected.

My sample size regarding project is limited to 50 only.

42

CHAPTER-3

COMPANY PROFILE

STATE BANK OF INDIA

State Bank of India is the largest commercial bank in India in terms of assets, deposits,

profits, branches and employees. The origins of State Bank of India date back to 1806 when the

Bank of Calcutta (later called the Bank of Bengal) was established. In 1921, the Bank of Bengal

and two other banks (Bank of Madras and Bank of Bombay) were amalgamated to form the

Imperial Bank of India. In 1955, the Reserve Bank of India acquired the controlling interests of

the Imperial Bank of India and SBI was created by an act of Parliament to succeed the Imperial

Bank of India.

Logo and slogan

The logo of the State Bank of India is a blue circle with a small cut in the bottom that

depicts perfection and the small man the common man - being the center of the bank's

business.

Slogans: "PURE BANKING, NOTHING ELSE", "WITH YOU - ALL THE WAY", "A BANK OF THE COMMON MAN", "THE BANKER TO EVERY INDIAN", "THE NATION BANK ON US.”

43

At the end of 2012-13 figures in crore in Rs.

Total assets 15,66,261.04Total deposits 12,02,739.57Net profits 3,299.22Branches Approx 15,000 (This is not in crore only numbers.)ATMs Approx 27,000 (This is not in crore only numbers.)

The State Bank Group consist of the following Associates Banks.

State Bank of Bikaner & Jaipur

State Bank of Hyderabad

State Bank of Mysore

State Bank of Patiala

State Bank of Travancore

Non-Banking Subsidiaries

Apart from its five associate banks, SBI also has the following non banking subsidiaries:

SBI Capital Markets

SBI Cards & Payments Services Private Limited

SBI Life Insurance Company Limited

SBI General Insurance Company Limited

SBI Fund Management Private Limited

SBI Global Factor Limited

SBI Pension Fund Private Limited

SBISG Global Securities Services Private Limited

44

Capital and Shareholding Pattern of SBI

Shareholders % of shares heldPresident of India 61.58Non-residents (FIIs/OCBs/NRIs/GDRs) 11.39Financial Institutions including Insurance Companies/Banks etc.

12.14

Mutual Funds/Government Companies/UTI 4.82Private Corporate Bodies 3.95Other including Resident Individuals 6.12

Corporate Structure of SBI

Corporate Centre

Circle

Network

Module

Region

Branch

45

Current Board of Directors

As on 14 January 2013, there are fifteen members in the SBI board of directors:-

S.no. NAME DESIGNATION1 Pratip Chaudhuri Chairman2 Hemant G. Contractor Managing Director3 Arundhati Bhattacharya Managing Director4 A. Krishna Kumar Managing Director5 S. Visvanathan Managing Director6 S. Venkatachalam Director7 D. Sundaram Director8 Thomas Mathew Director9 S.K. Mukherjee Officer Employee Director10 Rajiv Kumar Director11 Jyoti Bhushan Mohapatra Women Employee Director12 Deepak Amin Director13 Harichandra Bahadur Singh Director

Recent awards and recognitions

Best Online Banking Award, Best Customer Initiative Award & Best Risk Management

Award (Runner Up) by IBA Banking Technology Awards 2010.

Golden Peacock Award 2012 for Corporate Social Responsibility.

“Best Trade finance Bank in India” Award for 2012 by The Asian Banker.

Best Bank – Large and Most Socially Responsible Bank by the Business Bank Awards

2009.

Best Bank 2009 by Business India.

The Most Trusted Brand 2009 by The Economic Times.

Most Preferred Bank & Most preferred Home loan provider by CNBC.

Second Award under National Award For Excellence in MSE lending by the Government

of India for 2010-11.

In the Mobile Banking space, in june 2010, the Bank received the Prestigious IDRBT

award for ‘ Best use of technology for mobile banking and payment application’.

IBA Technology Award : Best Customer Initiative and Best Online Banking.

46

Competitors and other players in the field

47

CHAPTER: 4

DATA ANALYSIS & INTERPRETATION

MAY MONTH DATA OF NOIDA REGION :

4772.976%

55.41%

657.710%

1102%

322.1

5%

355.76%

Closing assets SBIMF

SBIHDFCCITI BANKAXISICICIKOTAK MAHINDRADEUTSCHE BANK

Description: Maximum contribution in SBIMF closing assets is from Sbi i.e. 76% , citi

bank contribution is 0%., HDFC contribution is 1%, Axis bank contribution is 10% ,

icici contribution is 2%, kotak Mahindra contribution is 5% and Deutsche bank

contribution is 6%.

4835.616%

4708.615%

8381.2999999999827%

4204.814%

4118.313%

2105.6

7%

2283.97%

Closing assets industry

SBIHDFCCITI BANKAXISICICIKOTAK MAHINDRADEUTSCHE BANK

48

Description: Maximum contribution in Mutual Fund industry closing assets is of citi bank

i.e. 27%, Axis bank contribution is 14%, Icici Bank contribution is 13%, Kotak

Mahindra contribution is 7%, Deutsche Bank contribution is 8%, Sbi Bank

contribution is 16% and HDFC contribution is 15%.

38755%

8.41%

127.618%

0.10%

149.621%

33.25%

Gross sales SBIMF

SBIHDFCCITI BANKAXISICICIKOTAK MAHINDRADEUTSCHE BANK

Description: Maximum contribution in SBIMF gross sales is of SBI i.e. 55%, HDFC is 1%,

Citi Bank is 0%, Axis Bank is 18%, ICICI is also almost 0%, Kotak Mahindra is

21%, and Deutsche Bank is 5%.

389.313%

615.621%

498.517%

655.123%

51.52%

482.317%

210.87%

Gross sales Industry

SBIHDFCCITI BANKAXISICICIKOTAK MAHINDRADEUTSCHE BANK

49

Description : Maximum contribution in gross sales of Mutual Fund Industry is of Axis

Bank i.e. 23%, ICICI is 2%, Kotak Mahindra is 17%, Deutsche Bank is 7%, SBI is

13%, HDFC is 21% and Citi Bank is 17%.

113.938%

-4.82%

110.537%

-3.91%

59.920%

-8.43%

Net Sales SBIMF

SBIHDFCCITI BANKAXISICICIKOTAK MAHINDRADEUTSCHE BANK

Description : Contribution in SBIMF net sales , SBI contribute maximum with 38%, Axis

bank with 37%, kotak Mahindra with 20% , Deutsche Bank contribution went on

negative with 3%, HDFC also on negativity with 3%, Citi Bank contribution is 0%,

and ICICI contribution is also negative with 1%.

95.79%

-63.46%

120.112%

297.929%

-98.510%

115.711%

-220.822%

NET SALES INDUSTRY

SBIHDFCCITI BANKAXISICICIKOTAK MAHINDRADEUTSCHE BANK

50

Description: Contribution in net sales of Mutual Fund Industry, SBI contribution is 10%,

HDFC Contribution is 6% in negative , Citi Bank Contribution is 12%, Axis Bank

contribution is 29%, ICICI Contribution is 10% but in negative, Kotak contribution

is 11% and Deutsche contribution is 22% but in negative.

318%

741%

16%

635%

NEW SIP SBIMF

SBIHDFCCITI BANKAXISICICIKOTAK MAHINDRADEUTSCHE BANK

Description : 41% new SIP in SBIMF is done by HDFC, 0% by Citi,ICICI,and Deutsche ,

1% by Axis Bank,and 6% by Kotak Mahindra.

32%

14178%

137%

1910%

53%

NEW SIP INDUSTRY

SBIHDFCCITI BANKAXISICICIKOTAK MAHINDRADEUTSCHE BANK

51

Description : 78 % contribution is done by HDFC for new SIP in Mutual Fund industry,

0% by Citi bank, ICICI, 7% by Axis Bank, 10 % by Kotak Mahindra, 3% by

Deutsche and 2% by SBI.

SBIHDFC

CITI BANK

AXISICICI

KOTAK M

AHINDRA

DEUTSC

HE BANK

0

200

400

600

800

1000

1200

955

20 0 1 4 10 9

Total SIP Sbimf

Total SIP Sbimf

Description : Total SIP in SBIMF is done by SBI in maximum amount, then after is HDFC,

Kotak Mahindra, Deutsche Bank, Citi bank hasn’t done any SIP.

96320%

270456%

4539%

54311%

762%

732%

Total SIP Industry

SBIHDFCCITI BANKAXISICICIKOTAK MAHINDRADEUTSCHE BANK

Description: Total SIP in Mutual fund Industry in which HDFC has contributed 56%, SBI 20%,

Kotak & Deutsche Bank has contributed 2%, ICICI 11%, Axis 9%, and Citi Bank 0%.

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318.296%

7.32%

0.20%

1.50%

3.41%

1.20%

SIP AUM SBIMF

SBIHDFCCITI BANKAXISICICIKOTAK MAHINDRADEUTSCHE BANK

Descripttion: Maximum SIP AUM in SBIMF is done by SBI.

32010%

1914.462%

57.82%

231.18%

438.214%

77.93%

36.71%

SIP AUM INDUSTRY

SBIHDFCCITI BANKAXISICICIKOTAK MAHINDRADEUTSCHE BANK

Description: Maximum SIP AUM in mutual fund industry is done by HDFC with 62%, SBI

with 10%, Deutsche Bank with 1%, Kotak Mahindra with 3%, ICICI with 14%, Axis

with 8% and Citi Bank with 2%.

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CHAPTER – 5

QUESTIONNAIRE AND ITS INTERPRETATION

Part - 1 : DEMOGRAPHICS

NAME

GENDER 1. FEMALE 2. MALE

AGE 1. 20-30 YEARS 2. 31-40 YEARS

3. 41- 50 YEARS 4. ABOVE 50 YEARS

EDUCATIONAL LEVEL

1.PRIMARY/ SECONDARY EDUCATION 2. DIPLOMA

2. GRADUATE 4. MASTERS OR HIGHER

PROFESSION 1. BUSINESS 2. SERVICE

Part – 2 : Questions

1. What kind of investment you prefer most?

a. Fixed Deposit b. Mutual Fund c. Insurance d. Gold e. real estate2. While investing your money, which factor you prefer most ?

a. liquidity b. low Risk c. High Return d. Company Reputation

3. Have you ever invested your in mutual fund ?

a.Yes b . No

If no,

If not invested in Mutual Fund then why?

a. Not aware of Mutual fund

b. Higher risk

c. Not any specific reason

If yes,

i) Where do you find yourself as a mutual fund investor?

a. Totally ignorant

b. Partial knowledge of Mutual fund

c. Aware only of any specific scheme in which you invested

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d. fully aware

ii) How do you come to know about Mutual fund?

a. Advertisement

b. Peer Group

c. Banks

d. Financial Advisors

4. How long would you like to hold your Mutual Fund’s Investment?

a. 1-3 years

b. 3-5 years

c 5-10 years

d. more than 10 years

5. In which Mutual Fund you have invested?

a. SBIMF

b. HDFC

c.RELIANCE

d. ICICI

e. OTHER SPECIFY

6. In Mutual Funds which mode of investment will you prefer?

a. One time investment

b. Systematic Investment Plan

7. From where you have purchased Mutual Funds?

a. Directly from the AMCs

b. Brokers only

c. Brokers/ sub –brokers

d. Through Banks

8. How would you like to receive the returns every year?

a. Dividend pay-out

b. Divdend re- investment

c. Growth in NAV

9. In which type of mutual fund schemes you have invested?

a. Debt schemes

b. Equity based schemes

c. Both

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10. Your overall experience with SBI mutual funds.

a. Satisfactory

b. Aveage

c. Unsatisfactory

Comment:-

11. Your overall experience with XYZ mutual fund.

a. satisfactory

b. average

c. Unsatisfactory

Comment:-

5.1 DATA ANALYSIS AND DESCRIPTION :- Sample size is 50.

47; 94%

3; 6%

GENDER

MALEFEMALE

Description: In a sample of 50, 94% are male are male and 6% are female.

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22; 44%

9; 18%

14; 28%

5; 10%

AGE

20-30 years31-40 41-50ABOVE 50

Description :- In a sample of 50 people, 44% are between 20-30 years, 18% are between

31-40 years, 28% are between 41-50 years and 10% are above 50.

23, 46%

27, 54%

EDUCATIONAL LEVEL

GraduateMasters or higher

Description: In a sample of 50 people, 54% are having master degree and 46% are

graduate.

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3, 6%

47, 94%

PROFESSIONAL LEVEL

Business service

Description: In a sample of 50 people, 94% are in service and 6% are doing business.

1938%

1632%

24%

612%

714%

1) what kind of investment you prefer most?

Fixed DepositMutual fundInsuranceGoldReal estate

Description: In a sample of 50 people, 38% of sample prefer Fixed Deposit, 32% of sample prefer

Mutual Fund, 4% prefer Insurance , 12% prefer Gold and 14% prefer Real estate.

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612%

2142%

1734%

612%

2) while investing your money, which factor you prefer most?

LiquidityLow riskHigh returnCompany reputation

Description: In a sample of 50 people 42% prefer low risk, 34% prefer high return, 12% prefer

company reputation and 12% prefer liquidity.

3774%

1326%

3. HAVE YOU EVER INVESTED YOUR MONEY IN MUTUAL FUND?

YesNo

Description : In a sample of 50 people, 74% of people have invested in mutual fund and 26%

haven’t invested in mutual fund.

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24% 6

12%

510%

3774%

a) If no, reason

Not aware of MFHigher riskNot any specific reasonNI

Description : In a sample of 50 people, 26% haven’t invested in mutual and among them 10%

don’t have any specific reason, 12% think that it is of high risk and 4% are not aware of mutual

fund.

NOTE : from here sample would be of 37 people only as only 37 people have invested in mutual

fund.

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NI – Not interested

13%

2054%9

24%

719%

b.i) where do you find yourself as a mutual fund investor?

Totally ignorantPartial knowledge of mutual fundsAware only of any specific scheme in which you investedfully aware

Description: In a sample of 37 people, 54% of people find themselves as having partial

knowledge about mutual fund, 24% are aware only of any specific scheme in which they have

invested, 19% are fully aware of mutual fund and 3% are totally ignorant.

924%

1027%

1027%

822%

b.ii) How do you come to know about Mutual Fund?

AdvertisementPeer GroupBanksFinancial advisors

Description: In a sample of 50 people, 27% of people came to know from peer group and banks,

24% of people came to know from advertisement and 22% of people came to know from financial

advisors.

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514%

1438%

1232%

616%

4) how long would you like to hold your mutual fund's investment?"

1-3 yrs.3-5 yrs.5-10 yrs.more than 10 years

Description: In a sample of 37 people , 38% of people like to investment for 3-5 years, 32% like

for 5-10 years, 16% like for more than 10 years and 14% like for 1- 3 years.

27; 38%

16; 22%

14; 19%

12; 17%

3; 4%

SBIMFHDFCRelianceiciciothers

Description: In a sample of 37 people, 38% have invested in SBIMF, 22% in HDFC,19% in

Reliance, 17% in icici and 4% in others.

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5) In which mutual fund you have invested?

616%

3184%

6) In mutual funds which mode of investment will you prefer?

one time investmentSIP

Description: In a sample of 37 people , 84% of people like to invest in SIP mode and 16% like to

invest in lump sum mode.

1232%

616%

616%

1335%

7) From where you have purchase mutual funds?

Directly from the AMCsBrokers onlyBrokers/Sub-brokersThrough Banks

Description : In a sample of 37 people, 35% of people used to purchase from bank, 33% of

people used to purchase from AMCs, 16% from broker only and 16 % from brokers/Sub brokers.

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411%

1027%

2362%

8) how would you like to receive the returns every year?

Dividend PayoutDividend re-investmentGrowth in NAV

Description : In a sample of 37 people, 62% like growth in NAV, 27% like Dividend re-

investment, 11% like Dividend payout.

25%

2259%

1335%

9) In which type of mutual fund schemes you have invested?

Debt SchemesEquity based SchmesBoth

Description : In a sample of 37 people, 60% like Equity based schemes, 35% like to invest in

both, and 5% like debt scheme.

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Note: from here sample size is 34.

1853%

1235%

412%

10) Your overall experience with SBI Mutual funds.

SatisfactoryAverageUnsatisfactory

Description: In a sample of 34 people, 53% are satisfy with SBIMF, 35% are feel average and

12% are unsatisfied with SBIMF.

Note: Sample here is 36.

1542%

1850%

38%

11) Your overall experience with XYZ Mutual funds.

SatisfactoryAverageUnsatisfactory

Description: In a sample of 36 people, 50% of people have an average experience with XYZ

mutual fund, 42 % have satisfactory experience, and 8 % have unsatisfactory experience.

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CHAPTER- 6

RECOMMENDATION:-

My Research period was for two month and in that whatever I have done for my project I have

concluded that. During my research period I have gain a lot of experience and I have also seen the

effort of STATE BANK OF INDIA towards it MUTUAL FUND PRODUCT. How much they are

contributing to enhance their mutual fund products. My recommendation to the bank for

enhancing its mutual fund products is:-

STATE BANK OF INDIA is the largest bank of india . This bank is largest in terms of having

number of customer also. From my research I have concluded that most of the people make an

investment in SBIMF and maximum of the come to know about mutual fund through bank and

also purchase mutual fund through banks. So, the main source of enhancing the mutual fund is

through its bank branches.

1. All day maximum number of people comes to bank to open saving, current and ppf

account. So the bank has to train its account opening employees in mutual fund.

2. The main source of getting business or money to the bank is through its personal

banking officers. So, the bank also has to give training to these employees about mutual

fund.

3. Some of the employees view in this regard is that they don’t get any target. So, they don’t

used to tell customer about cross products of Bank. So, to enhance the cross product of

the bank and mutual fund product bank has to give target to its employees.

4. Employees of SBIMF also have to inform or update its client time to time about the new

introduction of the product, changes in the guidelines of SEBI etc to gain customer

loyalty.

5. Bank should provide pamphlets, put standies, hoarding in premises of the branches. So

that it will help in the promotion of mutual fund.

6. As bank is having Corporate Salary Package Account, this will help in tie-up with

corporate and also helps in booking bulk business.

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7. Bank should motivate the employees for selling mutual fund through various campaigns

among branches & recognizing them.

8. Bank should attach either SIP form or mutual fund pamphlets along with all types of

account opening form. This will help in promoting mutual fund.

As bank is totally depend upon its branch for selling its cross product but branch is also

over burden in selling its core product. So, Branch should open a separate department in

which only cross product will be sold.

As the AMCs are totally dependent on branches for selling their product. So, SBI should

advice its AMCs to promote their product to different bank and not to depend on SBI

branches only.

CHAPTER- 7

67

CONCLUSION:

From the above data what I conclude that my sample is dominated by male group and

maximum are between 20-30 years of age. Most of them hold master degree and are doing

service.

Mostly people prefer to investment in Fixed Deposit and want to take low

risk. Maximum of the people have invested in Mutual fund and those who haven’t

invested in Mutual Fund think that investing in Mutual Fund means have to bear higher

risk. So, they don’t used to invest in Mutual Fund. Now, those who have invested in

Mutual Fund find themselves as having partial knowledge of Mutual Fund. Most of them

come to about Mutual Fund from their peer group and banks. People like hold their

Mutual Fund investment maximum for 3-5 years. From the above data what I also

conclude that people have invested in many Mutual Fund AMCs and most of them have

invested in SBI Mutual Fund. People want to invest their money in Mutual fund through

Systematic Investment Plan (SIP) mode. They feel SIP as a easy and comfortable way of

making investment. Most of people used to purchased mutual fund products from Banks

and also directly from AMCs. They like growth option rather than taking dividend. People

like to invest in Equity based Schemes mostly. Those who have made their investment in

Mutual Fund through SBI Mutual fund have satisfactory experience and those who have

made their investment in XYZ mutual fund i.e. other than SBI mutual fund have an

average experience means that they have good return as well as bad return from their

investment.

Some of the people’s comment:-

1. MR. K P Singh thinks that while investing in mutual fund there is too much of

fluctuation & uncertainty, also there is no surety of getting Principal as it is.

2. MR. Shovik Roy thinks that it is a safe route for accumulation of wealth for

particular targets.

3. MR. Raj Kumar thinks that Mutual Fund industry is going from bad phase .So

have to wait for some more years .

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4. MR. Vipul Patni thinks that return is very slow even after 6 years , he is in

negative.

5. MR. Krishan Chand Rana thinks that when funds used to be managed by R

Srinivasan of SBIMF, they used to provide good return.

6. MR. Ajit Kumar thinks that due to lack of knowledge about the Mutual fund

peoples are afraid to invest in it.

7. MR. Alok Mishra thinks that compare to others SBIMF working is not as much

smooth as customer want.

8. MR. Brajendra nath Vimal thinks that SBI Emerging Business Fund is very good

fund to make an investment.

From the data of month MAY, SBI has made good contribution to increase the closing assets of

SBIMF. Others Bank has also played important role to increase the closing assets of SBIMF.

HDFC in the month of MAY made a good contribution in creating new SIP for SBIMF. Axis

bank & SBI Bank has made good contribution in increasing the net sales of SBIMF. Great source

for SBIMF to get SIP is from its bank i.e. SBI Bank.

CHAPTER - 8

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BIBLIOGRAPHY:

http://en.wikipedia.org/wiki/State_Bank_of_India

http://www.moneycontrol.com/property/

http://www.alphainvestmentadvisory.com/discretionary_advisory-benefits.html

http://economictimes.indiatimes.com/

http://www.moneycontrol.com/mutual-funds/amc-assets-monitor

http://www.sbimf.com/Index.aspx

May month data of noida region was collected from SBI Mutual Fund Pvt. Ltd. (sector- 18, noida)

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