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8/6/2019 Study On Changing Scenario of Investment In Financial Market
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PROJECT REPORT
ON
Study On Changing Scenario of InvestmentIn Financial Market
AT
PRUDENTIAL ICICI AMC LTD.
PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF
POST GRADUATE DIPLOMA IN MANAGEMENT
2009-2011
I-BUSINESS INSTITUTE,GREATER NOIDA
SUBMITTED BY
NITIN GARG
PGDM:09033
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ACKNOWLEDGEMENT
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ACKNOWLEDGEMENT
I take this opportunity to express my deep sense of gratitude towards all those who
have been directly or indirectly helped me in the successful completion of the
project.
Finally I would like to thank all who helped me to complete this project.
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EXECUTIVE
SUMMARY
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EXECUTIVE SUMMARY
Title : RESEARCH ON CHANGING SCENARIO OFINVESTMENT IN FINANCIAL MARKET
COMPANY : prudential ICICI AMC Ltd.
This is a project about trends of Investment which is modernizing or
modifying day by day in financial market. It was because of changing the
perception of people for investing their money in Investment Plans.
OBJECTIVE
The main objective behind the market research is analysis the
market and find out suspects then convert into prospects and motivate or
promote them to invest their money in modern investment plans instead of
traditional plans.
RESEARCH METHODOLOGY
Research methodology which was use in market research qualitative
and quantitative techniques. The primary data was collected by personal
Interviews with the help of structured questionnaire and Secondary data was
collected by Internet, Journals, Magazines etc.
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FINDINGS
Maximum people were not ready to investment because they already
invested their money in march due to tax benefit.
The second reason was due to political uncertainty stock market is
highly volatile hence people were very scared for investment
Maximum people were interested in private sector for invest their
money.
LIMITATION
The unwillingness of the respondents to answer..
Due to declined stage people were not interested to do investment.
Time Constraint.
RECOMMENDATION
The creation of awareness about the need and importance of modern
Investments is vital.
New product innovation, low money investment plans and better
service is crucial for the company to increase its market share.
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CONCLUSION
Change is very important and one whose goes which the changing
environment always succeeds, that is what I have learnt from the study. The
competition has grown too much in the Investment Sector with the opening
of the sector. In this competition those who will survive who will take actions
quickly and smartly.
After Globalization plenty of Insurance & Investment related MNCs
came in India and developed their business. Due to globalization
Competition increases day to day and every rival exploring new innovative
ideas in investment plans for sustaining in Indian market. Today, Mutual
Fund, Unit Linked Insurance Plan (ULIP) and Systematic Investment Plan
(SIP) is most popular for Investment because they are fulfilling investors
requirements as ULIP is a combination of Modern + Traditional Insurance
Plans and which provides Tax benefit, Risk Cover and better growth to the
people whereas traditional Insurance plans are not consider as better growth
Plans.Therefore, We can realize that Investment scenario in
market is totally change and every people want to invest their money in
modern Investment plans those are more attractive and more flexible.
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INTRODUCTION
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INTRODUCTION
INVESTMENTS
What is Investment.??
The money you earn is partly spent and the rest saved for meeting
future expenses. Instead of keeping the savings idle you may like to use
savings in order to get return on it in the future which helps to your
unplanned expenses.
What is the need of INVESTMENTS..??
We need to invest to generate a specified sum of money for a specific
goal in life and its make a provision for an uncertain future.
One of the important reasons why we need to invest wisely is to meet
the cost of Inflation. Inflation is the rate by which the cost of living
increases. The cost of living is simply what it costs to buy the goods and
services you need to live. Inflation causes money to lose value because it
will not buy the same amount of a good or a service in the future as it does
now or did in the past.
For example, if there was a 6% inflation rate for the next 20 years, a Rs.
100 purchase today would cost Rs. 321 in 20 years. This is why it is
important to consider inflation as a factor in any long-term investment
strategy. Remember to look at an investment's 'real' rate of return, which is
the return after inflation. The aim of investments should be to provide a
return above the inflation rate to ensure that the investment does not
decrease in value.
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When to start Investing?
The sooner one starts investing the better. By investing early you allow your
investments more time to grow, whereby the concept of compounding (as
we shall see later) increases your income, by accumulating the principal and
7 the interest or dividend earned on it, year after year. The three golden
rules for all investors are:
y Invest early
y Invest regularly
y Invest for long term and not short term
What care should one take while investing?
Before making any investment, one must ensure to:
y obtain written documents explaining the investment
y read and understand such documents
y verify the legitimacy of the investment
y find out the costs and benefits associated with the investment
y assess the risk-return profile of the investment
y know the liquidity and safety aspects of the investment
y ascertain if it is appropriate for your specific goals
y compare these details with other investment opportunities available
y examine if it fits in with other investments you are considering
y deal only through an authorized intermediary
y see all clarifications about the intermediary and the investment
y explore the options available to you if something were to go.
y and then, if satisfied, make the investment.
(These are called the Twelve Important Steps to Investing)
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What is meant by Interest?
When we borrow money, we are expected to pay for using it this is known
as Interest. Interest is an amount charged to the borrower for the privilege
of using the lenders money. Interest is usually calculated as a percentage of
the principal balance (the amount of money borrowed). The percentage rate
may be fixed for the life of the loan, or it may be variable, depending on the
terms of the loan.
What factors determine interestrates?
When we talk of interest rates, there are different types of interest rates -
rates that banks offer to their depositors, rates that they lend to their
borrowers, the rate at which the Government borrows in the 8
Bond/Government Securities market, rates offered to investors in small
savings schemes like NSC, PPF, rates at which companies issue fixed
deposits etc.
The factors which govern these interest rates are mostly economyrelated and are commonly referred to as macroeconomic factors. Some of
these factors are:
y Demand for money
y Level of Government borrowings
y Supply of money
y Inflation rate
The Reserve Bank of India and the Government policies which determinesome of the variables mentioned above
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Whatare various options available for investment?
One may invest in:
y Physical assets like real estate, gold/jewellery, commodities etc.
and/or
y Financial assets such as fixed deposits with banks, small saving
instruments with post offices, insurance/provident/pension fund etc.
or securities market related instruments like shares, bonds,
debentures etc.
Investment plan in the past scenario:
Bank Fixed Deposits
Saving account
Post office NSC
Kisan vikas patra
BankFixed Deposits:
Bank Fixed Deposits are also known as Term Deposits. In a Fixed
Deposit Account, a certain sum of money is deposited in the bank for a
specified time period with a fixed rate of interest.
The rate of interest for Bank Fixed Deposits depends on the maturity period.
It is higher in case of longer maturity period. There is great flexibility in
maturity period and it ranges from 7days to 10 years. The interest is
compounded annually and is added to the principal amount.
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Savings Bank Account:
Savings Bank Account is often the first banking product people use,
which offers low interest (4%-5% p.a.), making them only marginally better
than fixed deposits.
Post Office Savings:
Post Office Monthly Income Scheme is a low risk saving instrument,
which can be availed through any post office. It provides an interest rate of
8% per annum, which is paid monthly. Minimum amount, which can be
invested, is Rs. 1,000/- and additional investment in multiples of 1,000/-.
Maximum amount is Rs. 3,00,000/- (if Single) or Rs. 6,00,000/- (if held
Jointly) during a year. It has a maturity period of 6 years. A bonus of 10% is
paid at the time of maturity. Premature withdrawal is permitted if deposit is
more than one year old. A deduction of 5% is levied from the principal
amount if withdrawn prematurely; the 10% bonus is also denied.
National Savings Certificates:
National Savings Certificates (NSC) are certificates issued by
Department of post, Government of India and are available at all post office
counters in the country. It is a long term safe savings option for the
investor. The scheme combines growth in money with reductions in tax
liability as per the provisions of the Income Tax Act, 1961. The duration of a
NSC scheme is 6 years.
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Kisan Vikas Patra:
Kisan Vikas Patra (KVP) is a saving instrument that provides interest
income similar to bonds. Amount invested in Kisan Vikas Patra doubles on
maturity after 8 years & 7 months.
Kisan Vikas Patra can be purchased by the following:
y An adult in his own name, or on behalf of a minor,
y A minor,
y A Trust,
y Two adults jointly.
Kisan Vikas Patra are available in the denominations of Rs 100, Rs 500, Rs
1000, Rs 5000, Rs. 10,000 & Rs. 50,000. There is no maximum limit on
purchase ofKVPs. Premature encashment of the certificate is not permissible
except at a discount in the case of death of the holder(s), forfeiture by a
pledgee and when ordered by a court of law.
Investment plan in the present scenario:
y Shares (NSE & BSE)y Mutual Funds
y Insurance
y ULIP
National Stock Exchange (NSE):
The National Stock Exchange of India Limited was created on the basis
of the report of the High Powered Study Group on Establishment of New
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Stock Exchanges, which recommended promotion of a National Stock
Exchange by financial institutions to provide access to investors from all
across the country on an equal footing. In 1992, NSE was incorporated as a
tax-paying company unlike other stock exchanges in the country. In April
1993, NSE was recognized as a stock exchange under the Securities
Contracts (Regulation) Act, 1956 and it commenced operations in the
Wholesale Debt Market (WDM) segment in June 1994. The Capital Market
(Equities) segment commenced operations in November 1994 and
operations in Derivatives segment were started in June 2000.
In October 1995, National Stock Exchange became the largest stock
exchange in the country. NSE launched S&P CNXNifty in April 1996. NSE is
one of the largest interactive VSAT based stock exchanges in the world.
Presently, it supports more than 3000 VSATs. The NSE- network is the
largest private wide area network in India and the first extended C- Band
VSAT network in the world.
Bombay Stock Exchange (BSE):
Bombay Stock Exchange Limited is the oldest stock exchange in Asia.
Popularly known as BSE it was established as "The Native Share & Stock
Brokers Association" in 1875.
It is the first stock exchange in India to obtain permanent recognition in
1956 from the Government of India under the Securities Contracts
(Regulation)Act,1956.
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Bombay Stock Exchange played a pivotal role in the development of the
Indian capital market and its index, SENSEX, is tracked worldwide. The
Exchange has a nation-wide reach with a presence in 417 cities and towns of
India. BSE provides an efficient and transparent market for trading in equity,
debt instruments and derivatives.
Mutual Funds in India:
Mutual Fund is an instrument of investing money. Nowadays, bank
rates have fallen down and are generally below the inflation rate. Therefore,
keeping large amounts of money in bank is not a wise option, as in real
terms the value of money decreases over a period of time.
One of the options is to invest the money in stock market. But a common
investor is not informed and competent enough to understand the intricacies
of stock market. This is where mutual funds come to the rescue.
A mutual fund is a group of investors operating through a fund manager to
purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost
efficient and very easy to invest in. By pooling money together in a mutual
fund, investors can purchase stocks or bonds with much lower trading costs
than if they tried to do it on their own. Also, one doesn't have to figure out
which stocks or bonds to buy. But the biggest advantage of mutual funds is
diversification.
y Diversification means spreading out money across many different types of
investments. When one investment is down another might be up. Diversification of
investment holdings reduces the risk tremendously.
y
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Insurance:
Life is a roller coaster ride and is full of twists and turns. You cannot
take anything for granted in life. Insurance policies are a safeguard against
the uncertainties of life.
Insurance is system by which the losses suffered by a few are spread over
many, exposed to similar risks. Insurance is a protection against financial
loss arising on the happening of an unexpected event. Insurance policy helps
in not only mitigating risks but also provides a financial cushion against
adverse financial burdens suffered.
Insurance policies cover the risk of life as well as other assets and
valuables such as home, automobiles, jewelry et al. On the basis of the risk
they cover, insurance policies can be classified into two categories.
Unit Linked Insurance Plans (ULIP):
Unit linked insurance plan (ULIP) is life insurance solution that
provides for the benefits of protection and flexibility in investment. The
investment is denoted as units and is represented by the value that it has
attained called as Net Asset Value (NAV). The policy value at any time varies
according to the value of the underlying assets at the time.
ULIP provides multiple benefits to the consumer. The benefits include:
y Life protection
y Investment and Savings
y Flexibility
y Adjustable Life Cover
y Investment Options
y Transparency
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y Options to take additional cover against
y Death due to accident
y Disability
y Critical Illness
y Surgeries
y Liquidity
y Tax planning
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OBJECTIVE &
SCOPE
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OBJECTIVE & SCOPEObjective:
The primary objective was to analysis the market and find out the
potential customer and motivate or promote them to invest their money in
modern Investment plan rather than traditional Investment plan.
The secondary objective were:
To do the comparative analysis of the two options and to bring forth,
thus to the potential customer.
To create awareness among the customer
To create marketing awareness of the Investment product and also
identify the potential for this product.
To analyze the marketing strategy of the competitors
To analyze Investment pattern.
Search Method:
The method used for research was descriptive method. It involved
collection of primary data and Secondary data. As far as project was
concerned primary data was obtained by market analysis through field.
Contact Method:
Telephone Interview
Personal Interview
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INDUSTRY
PROFILE
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INDUSTRY PROFILEOVERVIEW OF INVESTMENT:
Institutional investment
The rapid growth of stock markets in the world, to a significant extent could
be explained by the surge in the institutional investors consisting of pension
funds, insurance companies and mutual funds. During the period 1995 and
2005, the assets under management of the institutional investors doubled
from US$21 trillion to US$53 trillion. A large number of institutional
investors are moving away from the home bias investing in outside world.
Emerging markets with higher economic growth and rapidly growing
financial markets became major centers of destination for the investments of
institutional investors. For instance in the US, in 1994, pension funds
invested 41% of their portfolio in domestic equity and 7% in international
equities, where as by 2005 that share rose to 48% in domestic equities and
15% in international equities. The portfolio allocation to bond markets during
the same period reduced from 42% to 32%. Emerging markets received
sizeable portion of the investments. In the US, the dedicated emerging
markets mutual funds rose from about US$27 bn in 2000 to US$ 230 bn in
2006.
International listings
On the back of the liberalization of cross border financial flows, companies in
several countries are seeking listing in international exchanges to garner
benefits from international investors as also widen their investor base. The
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number of foreign companies listed in the London Stock Exchange rose from
387 in 1970 to 553 in 1990 to 636 in 2006. The number of foreign
companies listed on the NYSE has also risen rapidly in the 1990s. There is a
keen competition across the worlds leading stock exchanges to promote
international listing and gain greater influence. In the recent period, the US
experienced a slowdown in the listing of foreign companies. The decline is
attributed to stringent corporate governance norms that were applied
following the corporate abuses found in the beginning of the decade. The US
is now examining in greater detail measures to gain the prominence once it
enjoyed in the international listings. The Alternative Investment Market of
London Stock Exchange attracted huge interest from SMEs from a large
number of countries.
Emerging markets as an investment destination
Liberalization of capital flows led to surge in international investment into
emerging economies finding value on the back of huge prospects for growth.
The flow of net Foreign Direct Investment (FDI) into developing countries
increased from US$ 170 bn in 1998 to US$ 325 bn in 2006 and net portfolio
equity flows increased from US$6 bn to US$94 bn during the same period.
Net debt flows during this period are rather subdued with net debt flows
from official creditors turning negative. Net portfolio equity flows to China
between the year 2000 and 2006 rose from US$6.9 bn to US$32 bn and in
India from US$2.3 bn to US$8.7 bn. Other emerging markets such as Brazil,
Mexico, South Africa, Thailand and Russia too, showed surge in the net
portfolio equity flows. Emerging markets showed significant growth in stock
prices making them attractive investment destinations though issues of
valuations are beginning to become a concern now.
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Currently, looking at the five most important asset classes - real
estate, equities, bonds, commodities, and art (including collectibles)
Admittedly, some assets have performed better than others, but in general
every sort of asset has risen in price, and this is true everywhere in the
world.
In the early phases of all previous investment booms, investors failed
to recognize that the "rules of the game" had changed and continued to play
the asset class that had been the leader in the previous investment mania.
In the 1980s, every increase in gold and silver prices was perceived to be
the beginning of a new bull market in precious metals (after silver prices
collapsed in January 1980, prices doubled three times between 1980 and
1990 - all within a downtrend), while investors maintained a very skeptical
view of bonds. In the early 1990s, investors failed to recognize the
emergence of a high-tech sector uptrend, although, as explained above,
high-tech stocks were already performing extremely well between 1990 and
1995. Global investors continued to believe in the merits of Asian stocks
right to the end and actually stepped up their buying in early 1997!
Similarly, in the current asset inflation, investors have continued to focus on
the high-tech bull market and have largely missed out on the huge increase
in price of commodities, and of Indian, Latin American, and Russian equities.
At the end of each investment mania, investors believed in some sort of
"excess liquidity" that would drive the object of the speculation forever
higher.
After globalization many of MNCs came here and set up their business
in India. Therefore, The competition would also increase and every
investment company provides better or adorable plans to the potential
customer and they also retain their existing customer through providing
better services.
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ROLE OF INVESTMENT IN OUR LIFE:
Riskand uncertainties are part of lifes and they will never stop
like accident, illness,theftand other uncertainties they will happen
in life suddenly and we can notmanage our expenses according to
them.We will invest ourmoney formake a solution of big future
expenses that can we never change like higher education,marriage
of our children and we can also make easy of our future by taking
pension plans.
INVESTMENT AS INSURANCE:
Investment assures your uncertain future and provides you secure life.
Insurance is an attractive option for investment. While most people
recognize the risk hedging and tax saving potential of insurance, many are
not aware of its advantages as an investment option as well.
Today, Insurance Company promotes ULIP as investment product
which provides you good growth, tax benefit, risk cover and short term
plans. In fact, the premium you pay for an insurance policy is an investment
against risk. Thus, before comparing with other schemes, you must accept
that a part of the total amount invested in ULIP goes towards providing for
the risk cover, while the rest is used for saving
ULIP is a unique investment avenue that delivers sound returns
in addition to protection.
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Investmentas Tax Planning:
Long term Investment serves as an excellent tax saving mechanism
too. The Government of India has offered tax incentives to long term
investment products in order to facilitate the flow of funds into productive
assets. Under Section 88C and section 10(10D) of Income Tax Act 1961,
an individual is entitled to a rebate of 20 per cent on the annual premium
payable on his/her life of his/her children or adult children. The rebate is
deductible from tax payable by the individual or a Hindu Undivided Family.
This rebate is can be availed up to a maximum of Rs. 48000.
INVESTMENT AS FUTURE SOLUTION:
Investment work as solution of your uncertain future. Its also helps to
fulfill your future needs and demands. One of the important reasons why
one needs to invest wisely is to meet the cost of Inflation.Inflation causes
money to lose value because it will not buy the same amount of a good or a
service in the future as it does now or did in the past Investment. Therefore,
we can say that Investment
Of our money helps in future expenses.
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TYPES OF INVESTMENT PLANS:
There are two types of Investment plans are exist. Most of the
products offered by Investment companies are developed and structuredaround these basic plans and are usually an extension or a combination of
these plans. So, what are these plans and how do they differ from each
other?
Short Term InvestmentPlan:
Broadly speaking, savings bank account, money market/liquid funds
and fixed deposits with banks may be considered as short-term financial
investment options:
Savings Bank Account:
Saving Bank Account is often the first banking product people use,
which offers low interest (4%-5% p.a.), making them only marginally better
than fixed deposits.
Money Market or Liquid Funds:
Money Market or Liquid Fundsare a specialized form of mutual funds
that invest in extremely short-term fixed income instruments and thereby
provide easy liquidity. Unlike most mutual funds, money market funds are
primarily oriented towards protecting your capital and then, aim to maximize
returns. Money market funds usually yield better returns than savings
accounts, but lower than bank fixed deposits.
Long Term InvestmentPlans:
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Public ProvidentFund:
A long term savings instrument with a maturity of 15 years and
interest payable at 8% per annum compounded annually. A PPF account can
be opened through a nationalized bank at anytime during the year and is
open all through the year for depositing money. Tax benefits can be availed
for the amount invested and interest accrued is tax-free. A withdrawal is
permissible every year from the seventh financial year of the date of
opening of the account and the amount of withdrawal will be limited to 50%
of the balance at credit at the end of the 4th year immediately preceding the
year in which the amount is withdrawn or at the end of the preceding year
whichever is lower the amount of loan if any.
Company Fixed Deposits:
These are short-term (six months) to medium-term (three to five
years) borrowings by companies at a fixed rate of interest which is payable
monthly, quarterly, semi10 annually or annually. They can also be
cumulative fixed deposits where the entire principal along with the interest is
paid at the end of the loan period. The rate of interest varies between 6-9%
per annum for company FDs. The interest received is after deduction of
taxes.
Bonds:
It is a fixed income (debt) instrument issued for a period of more than
one year with the purpose of raising capital. The central or state
government, corporations and similar institutions sell bonds. A bond is
generally a promise to repay the principal along with a fixed rate of interest
on a specified date, called the Maturity Date.
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COMPANY
PROFILE
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ORGNISATIONAL PROFILE
Aboutthe organization:
ICICI Bank is India's second-largest bank with total assets of Rs.
3,997.95 billion (US$ 100 billion) at March 31, 2008 and profit after tax of
Rs. 41.58 billion for the year ended March 31, 2008. ICICI Bank is second
amongst all the companies listed on the Indian stock exchanges in terms of
free float market capitalization. The Bank has a network of about 1,308
branches and 3,950 ATMs in India and presence in 18 countries. ICICI Bank
offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its
specialized subsidiaries and affiliates in the areas of investment banking, life
and non-life insurance, venture capital and asset management. The Bank
currently has subsidiaries in the United Kingdom, Russia and Canada,
branches in Unites States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar
and Dubai International Finance Centre and representative offices in United
Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and
Indonesia. Our UK subsidiary has established branches in Belgium and
Germany.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange
and the National Stock Exchange of India Limited and its American
Depositary Receipts (ADRs) are listed on the New York Stock Exchange
(NYSE).
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VISION:
To make ICICI Bank dominant life and built on trust by world-class
people and service
This we hope to achieve by :
Understanding the needs of customers and offering them superior
products and service.
Leveraging technology to service customers quickly, efficiently and
conveniently.
Developing and implementing superior risk management and
investment strategies to offer sustainable and stable returns to our
policy holders.
Providing an enabling environment to faster growth and learning forour employees.
And above all building transparency in all our dealing
The success of the company will be founded in its unflinching to 5 cores
values-integrity, customer first boundary less, ownership and passion. Each
of the values describes what the company stands for, the qualities of our
people and the way we work. We do believe that we are on the threshold of
an exciting new opportunity, were we can play significant role in redefine
and reshaping the sector. Given the quality of our percentage and the
commitment of our team, there is no limit to our growth.
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Promoters:
ICICI Bank is a professionally managed entity that was created post
the merger of the erstwhile ICICI Limited with its subsidiary ICICI Bank. Due
to the merger with its parent, the shareholding of ICICI Bank has changed
significantly and foreign investors now have over 73% stake in the bank.
Government controlled entities own over 15% stake in ICICI Bank, while
other Indian entities hold the rest of the stake. This means that there is no
defined promoters entity for ICICI Bank and the functioning of the bank is in
the hands of a professional team of managers.
Objects ofthe issue:
The objects of the issue are to provide capital for
Executing the banks business strategy, including growth in its retail
portfolio. International Expansion,
Investment in its insurance subsidiaries, and
Other general corporate purposes.
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Introduction of ICICI Bank
ICICI Group
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Overview :-
ICICI Bank was originally promoted in 1994 by ICICI Limited, an
Indian financial institution, and was its wholly-owned subsidiary. ICICI's
shareholding in ICICI Bank was reduced to 46% through a public offering of
shares in India in fiscal 1998, an equity offering in the form of ADRs listed
on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura
Limited in an all-stock amalgamation in fiscal 2001, and secondary market
sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI
was formed in 1955 at the initiative of the World Bank, the Government of
India and representatives of Indian industry. The principal objective was to
create a development financial institution for providing medium-term and
long-term project financing to Indian businesses. In the 1990s, ICICI
transformed its business from a development financial institution offering
only project finance to a diversified financial services group offering a wide
variety of products and services, both directly and through a number of
subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first
Indian company and the first bank or financial institution from non-Japan
Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the
context of the emerging competitive scenario in the Indian banking industry,
and the move towards universal banking, the managements of ICICI and
ICICI Bank formed the view that the merger of ICICI with ICICI Bank would
be the optimal strategic alternative for both entities, and would create the
optimal legal structure for the ICICI group's universal banking strategy. The
merger would enhance value for ICICI shareholders through the merged
entity's access to low-cost deposits, greater opportunities for earning fee-
based income and the ability to participate in the payments system and
provide transaction-banking services. The merger would enhance value for
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ICICI Bank shareholders through a large capital base and scale of
operations, seamless access to ICICI's strong corporate relationships built up
over five decades, entry into new business segments, higher market share in
various business segments, particularly fee-based services, and access to
the vast talent pool of ICICI and its subsidiaries. In October 2001, the
Boards ofDirectors of ICICI and ICICI Bank approved the merger of ICICI
and two of its wholly-owned retail finance subsidiaries, ICICI Personal
Financial Services Limited and ICICI Capital Services Limited, with ICICI
Bank. The merger was approved by shareholders of ICICI and ICICI Bank in
January 2002, by the High Court of Gujarat at Ahmedabad in March 2002,
and by the High Court of Judicature at Mumbai and the Reserve Bank of
India in April 2002. Consequent to the merger, the ICICI group's financing
and banking operations, both wholesale and retail, have been integrated in a
single entity.
ICICI Bank has formulated a Code of Business Conduct and Ethics for
its directors and employees.
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PRODUCT
PROFILE
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PRODUCT PROFILE
The ICICI Bankadvantages:
The salient points that you make like to keep in mind before choosing
on your strategic partnership.
Strong retail focus:
After the merger with parent ICICI, ICICI Bank is focusing strongly onthe retail segment in order to fuel its growth for the future. The bank has
been very aggressive in this segment, so much so that retail assets now
make up nearly 48% of total advances of the bank. ICICI Bank's market
share in incremental retail loans disbursed is close to 30%. This indicates the
focus the bank has evinced in the retail segment. ICICI Bank has also
significantly pared its exposure to the corporate segment in order to
increase its presence in the retail segment.
Wide reach:
ICICI Bank has been on an expansion spree in the last year and in this
period it has seen its branch size increase to around 540 branches. The bank
is also leveraging on a large ATM network in order to augment its reach
further. At the end of FY03, the bank had an ATM network of over 1,500
ATMs spread across the country. Due to the aggressive branch and ATM
network expansion, the bank has been able to grow its retail assets
significantly. Going forward, the bank is in a good position to tap the retail
market due to its extended reach.
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Benefits fromthe Securitization Act:
The erstwhile ICICI Limited had a significant amount of NPAs in its
books. The passing of the Securitization Act is likely to go a long way in
helping ICICI Bank recovering dues from defaulters. The bank has already
formed an Asset Recovery Company (ARC), in partnership with entities like
SBI and IDBI in order to take advantage of the provisions of the act.
Restructuring operations:
In an effort to reduce its interest costs ICICI Bank undertook an
exercise to reduce its parent ICICI's high cost liabilities. In this effort, the
bank has met with significant success. ICICI Bank has paid back a large part
of ICICI's long-term high cost borrowings and in its place replace it with low
cost deposits. This has helped the bank to improve its interest spread to
1.5% (FY03) from 1.2% in FY02. Going forward with further restructuring of
borrowings and increased contribution from retail deposits, ICICI Bank is
likely to witness further improvement in its spreads.
Today, if you check with any corporate distributor that tide up with us,
they will uniformly confirm that our distribution support is the best in the
industry. They feel these are the most important points for the success of
banc assurance model. We would be glad to discuss more details with your
team. Should you have any further clarifications needed we also invite yourteam to interact with our actuarial, underwriting, client servicing and IT
teams to see for themselves the high quality systems processes and skills
the company has.
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ICICI Bank Provides Various Types of Investments Plans
are:
MUTUAL FUNDS:
Mutual Funds pool money of various investors to purchase a wide variety ofsecurities while pursuing a specific goal. Selection of Securities for thepurpose is done by specialists from the field. Returns generated aredistributed to the Investors. At ICICI Bank NRI services, we will help youdetermine which types of funds you need to meet your investment goals.This may include the following types of funds:
1.Debt: Liquid schemes, Income schemes, G-sec schemes, Monthly Income
Schemes etc.
2. Equity: Diversified Equity Schemes, Sector Schemes, Index Schemes etc.
3. Hybrid Funds: Balanced Schemes, Special Schemes - Pension Schemes,Child education Schemes etc.
We help you identify an appropriate mix of Mutual Fund schemes for yourportfolio using asset allocation strategies. You can invest in various schemes
of multiple mutual funds with decent performance record.
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Why Invest in Mutual Fund?
Professional Money Management and Research:
Mutual funds are managed by professional fund managers who regularly
monitor market trends and economic trends for taking investment decisions.
They also have dedicated research professionals working with them who
make an in depth study of the investment option to take an informed
decision.
Risk Diversification:
Diversification reduces risk contained in a portfolio by spreading it. It is
about not putting all your eggs in one basket. As mutual funds have huge
corpuses to invest in, one can be part of a large and well-diversified portfolio
with very little investment.
Convenience:
With features like dematerialized account statements, easy subscription and
redemption processes, availability ofNAVs and performance details through
journals, newspapers and updates and lot more; Mutual Funds are sure a
convenient way of investing.
Liquidity:
One of the greatest advantages of Mutual Fund investment is liquidity.
Open-ended funds provide option to redeem on demand, which is extremely
beneficial especially during rising or falling Markets.
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Reduction in Costs:
Mutual funds have a pool of money that they have to invest. So they are
often involved in buying and selling of large amounts of securities that will
cost much lower than when you invest on your own.
Tax Advantages:
Investment in mutual funds also enjoys several tax advantages. Dividends
from Mutual Funds are tax-free in the hands of the investor (This however
depends upon changes in Finance Act). Also, capital gain accrued from
mutual funds investments for period of over one year is treated as long term
capital appreciation and is taxed at a lower rate of 10% without benefit of
indexation or 20% with benefit of indexation.
Other Advantages:
Indian Mutual fund industry also presents several other benefits to the
investor like: transparency - as funds have to make full disclosure of
investments on a periodic basis, flexibility in terms of needs based choices,
very well regulated by SEBI with very strict compliance requirements to
investor friendly norms.
Where to Invest?
ICICI Bank has tied up with several Mutual Funds so as to provide you the
convenience of Varied Investment.
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You have a choice to invest with the top 17 AMCs in India offering around
300 schemes
AMC offered
Alliance MutualFund
CholamandalamMutual Fund
DSP Merrill lynch Deutsche
Franklin Templeton HDFC HSBC ING Vysya
JM Financial Kotak mahindra Principal Prudential
Reliance Standard Chartered Sundram Tata
Birla
Why invest with us?
NRI Services offers investment in Mutual Funds through Multiple Channels.
With ICICI Bank, you can invest in Mutual Funds through following channels
- India Sales Team
- ETC Team (Email, Telephone & Chat Team)
- Wise Invest
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LIFE INSURANCE:
Being away from India doesn't mean you have to compromise the safety and
security of your loved ones. In fact, your savings from your time overseas
can be easily canalized to meet your family's needs - now and in the future.So, whether its your dream to retire in your hometown; to secure funds for
your children's education; or to build assets, ICICI Prudential has a range of
solutions that can be customized to meet your needs. Today, In Life
Insurance ULIP(Unit linked Insurance Plan) is most popular because it
provides good wealth creation and risk cover.
Broadly, insurance plans can be distinctly divided into ULIP (Unit Linked
Insurance Plans) and traditional plans. A brief detail of both segments:
Unit Linked Insurance Product
ULIPs have gained high acceptance due to attractive features they offer.
These include:
1.Flexibility
1. Flexibility to choose Sum Assured.
2. Flexibility to choose premium amount.
3. Option to change level of Premium /Sum Assured even after the
plan has started.
4. Flexibility to change asset allocation by switching between funds.
2.Transparency
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1. Charges in the plan & net amount invested are known to the
customer.
2. Convenience of tracking ones investment performance on a
daily basis.
3.Liquidity
1. Option to withdraw money after few years (comfort required in
case of exigency).
2. Low minimum tenure.
3. Partial / Systematic withdrawal allowed
4.Fund Options
1. A choice of funds (ranging from equity, debt, cash or a
combination).
2. Option to choose your fund mix based on desired asset allocation
There are some products of ULIP:
y Investment and Saving Plans
y Retirement Plans
y Child Plans
Investmentand Saving Plans:
Endowment policies are a good way of putting aside your savings today for a
future goal - whether it's to buy a house in India or fund your
entrepreneurial vision. Our savings-oriented policies are designed to make
your savings grow and have them available to you at the end of a fixed
number of years or through the term of the plan.
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y Lifetime Gold
y Lifetime Plus
y Lifetime Super
y Life Link Super
RetirementPlans:
Many of us picture ourselves enjoying the fruits of our labor after retirement
- going on a dream vacation, or helping our child's career take wing.
Financing all this will depend on our personal savings and investments, so its
important to save for the future from today. Our retirement plans are
designed to help you systematically save, so that you can enjoy all the
things you have dreamed of when you retire.
y Life Link Super pension
y Life Time SuperPension
y Life Time stage Pension
y
Foreve
rLife
y Premier Life Pension
Child Plans:
As a responsible parent, you want to ensure a hassle-free, successful life for
your child. However, life is full of uncertainties and even the best-laid plans
can go wrong. SmartKid Education Plans are designed to provide flexibility
and to safeguard your child's future education and lifestyle, taking allpossibilities into account. SmartKid Child Plans has a bouquet of three
products which can help you secure your
child's
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y SmartKid New Unit-Linked RegularPremium
y SmartKid New Unit-Linked Single Premium
y SmartKid RegularPremium
COMPARISON BETWEEN ULIP AND MUTUAL FUNDS
ULIP MUTUAL FUND
Most plan offer more than three
free funds switches every year
Switching is costly. Exit and entry
load and can be as high as 3-4%
There is no tax implication when
switching between funds
Profit from equity funds taxed at
10% debt profits added to income
Top-ups come with 1% charge Top-ups carry 2.25% charge
Good only for long term investing
because of high initial charge
Good for short term and long
term investing time frame
Life cover is compulsoryPure investing and life cover is
optional
You need to contribute regularly
for the long term
Investor not under any
compulsion to invest year after
year
There are various funds in mutual fund and ULIP:-
1.Maximiser: High risk funds and these funds in 100% share market
related and it provides 25%-35% earning.
2.Balancer : Moderate risk funds and these funds in40% Share Market
60% Share Market
15%-20% Earning
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3.Protector: Low risk funds and these funds in
Govt. Bonds
5%-8% Earning
4.Preserver: It also low risk funds and provides low earning too.
Call Money Market
4%-6% Earning
Best Performing ULIPs:
Name ReturnICICI Maximiser 29.80
KOTAK Growth 25.88
HDFC Growth 22.85
AVIVA Easy Life 22.26
BIRLA Enhance 13.38
(up to September 1,2007, figure in %)
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RESEARCHMETHODOLOGY
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RESEARCH METHODOLOGY
Achieving accuracy in any research requires in depth study regarding
the subject. As the prime objective of the project is compare various
Investment products available in the market with the existing players in the
market and the impact of entry of private players in the market, the
research methodology adopted was basically based on primary data via
which the most recent and accurate piece of first hand information that
could be collected from all possible source. Secondary data was used to
support primary data wherever needed.
Primary data was collected using the following techniques:
Questionnaire method
Direct interview method
Observation method
The main tool used was the questionnaire method. Further direct
interview method, where a face to face formal interview will be taken. Lastly
observation method was used continuously with the questionnaire method,
as one continuously observes the surrounding environment he works in.
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Procedure of Research Methodology:
To conduct this research the target population was the people aware
or not aware from modern Investment plan like: Mutual Fund, Unit
Linked Insurance Plan, Systematic Investment Plan and Fixed Deposit
and paying tax.
Target geographic area was Jaipur. Sample size of 90 people was
taken
To these 90 people a questionnaire was given, the questionnaire was a
combination of both open ended and closed question.
Some people already have investment plan were also interviewed to
know their prospective.
Finally the collected data and information was analyzed and compiled
to arrive at the conclusion and recommendation given.
Sources of Secondary Data:
These source were use to obtain information on, ICICI Bank and other
competitors history, current issues, policies, procedures etc, wherever
required.
INTERNET
MAGZINES
NEWSPAPERS
JOURNALS
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DATA ANALYSIS
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DATA ANALYSIS
MARITAL STATUS NO.OF RESPONDANTS
MARRIED 65
UNMARRIED 25
SAMPLE SIZE 90
Graph No. 1
OBSERVATIONS:
65 samples are married out of 90 samples and they were more potential
customer.
No. of Respondents
65
25
0
10
20
30
40
50
60
70
MARRIED UNMARRIED
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PROFILE BASIS NO. OF RESPONDANTS
GOVT. EMPLOYEE 17
PVT. EMPLOYEE 32
SELF EMPLOYEE 41
SAMPLE SIZE 90
Graph No. 2
OBSERVATIONS:
In during my summer internship I observed that Pvt. And Self employedwere major prospective instead of govt. employee.
17
32
41
0
5
10
15
20
25
30
35
40
45
GOVT. EMPLOYEE PVT. EMPLOYEE SELF EMPLOYEE
No. of Respondants
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1. In which Sector do you prefer to invest your money?
PROFILE BASIS NO. OF RESPONDENTS
Private Sector 53
Government Sector 37
Total 90
Graph No. 3
OBSERVATION:
I field in my during my field work 59% samples were private sector whereas
41% samples were prefer to invest their money in government sector..
59%
41%
No. of Respondants
Pvt. Sector
Govt. Secotor
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2. Which type of Investment plan do you prefer?
PROFILE BASIS NO. OF RESPONDENTS
a. Bank FD 16
b. ULIP(insurance products) 26
c. Mutual Fund 14
d. Stock Market 22
e. SIP(Systematic Investment Plan) 12
Graph No. 4
OBSERVATION:
y 26 sample out of 90 were preferred ULIP that is ULIP is more
preferable Investment product
y Secondly 22 sample out of 90 were preferred Invest in Stock Market.
0
5
10
15
20
25
30
Bank FD ULIP Mutual Fund Stock Market SIP
16
26
14
22
12
No. of Respondants
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3. How much term of Investment Plans do you like most?
PROFILE BASIS NO. OF RESPONDENTS
a. 0-3 years 18
b. 3-6 years 35
c. 6-10 years 27
d. Above 10 years 10
Graph No. 5
OBSERVATION:
y 39% of samples preferred 3-6 years Investment while 30% people
preferred 6-10 years Investment.
20%
39%
30%
11%
No. of Respondants
0-3 years 3-6 years 6-10 years Above 10 years
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4. What do you see in long term Investment plans?
PROFILE BASIS NO. OF RESPONDENTS
a. Growth 11
b. Risk Cover 09
c. Tax Benefit 18
d. All of the above 52
Graph No. 6
OBSERVATION:
y I observed that in during the summer project more than half of
respondents which 58% were interested in all of the above factors.
12%
10%
20%58%
No. of Respondents
Growth Risk Cover Tax Benefit All of the above
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5. How much risk do you prefer in Investment Plans?
PROFILE BASIS NO. OF RESPONDENTS
a. High Risk 43b. Moderate Risk 31
c. Low Risk 16
Graph No. 7
OBSERVATION:
I found in during my training 48% preferred High risk whereas 34%samples preferred moderate risk while low risk sample were very low.
As I observed that max people are of below 30 they have willingnessto achieve high growth for fulfill their dreams and therefore, they wantto invest their money in pure equity market rather then debt or moneymarket
48%
34%
18%
No. of Respondents
High Risk
Moderate Risk
Low Risk
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6. Have you ever used Mutual Fund as an Investment before?
PROFILE BASIS NO. OF RESPONDENTS
a. Yes 36
b. No 54
Graph No. 8
OBSERVATION:
I observed in during my training 54 samples never invest their money in MFs
while 36 samples invested their money in MFs.
36
54
No. of Respondents
Yes
No
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7. Do you consider Inflation a significant risk?
PROFILE BASIS NO. OF RESPONDENTS
a. Yes 69
b. No 21
Graph No. 9
OBSERVATION:
I observed that people are not investing their money in market due toincreasing inflation so 77% were said Inflation is significant risk.
77%
23%
No. of Respondents
Yes
No
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8. Is a down period in the Stock Market a buying opportunity?
PROFILE BASIS NO. OF RESPONDENTS
a. Yes 58
b. No 32
Graph No. 10
OBSERVATION:
64% believe that down period of stock market is a buying opportunity
because that time they can get more units instead of up period of
stock market.
64%
36%
No. of Respondents
Yes
No
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9. Is Private Life Insurance Company reliable for Investment?
PROFILE BASIS NO. OF RESPONDENTSa. Yes 51
b. No 39
Graph No. 11
OBSERVATION:
I observed that more than samples preferred private companies rather thangovt. for their better services.
51
39
No. of Respondents
Yes
No
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10. What are the factors on which Private Life Insurance
Company differs from LIC?
PROFILE BASIS NO. OF RESPONDENTS
a. Service Quality 37
b. Flexibility 24
c. Maturity Period 13
d. Returns 16
Graph No. 12
OBSERVATION:
Respondents Percentage
Service Quality 37 41%
Flexibility 24 27%
Maturity 13 14%
Returns 16 18%
Total 90 100%
41%
27%
14%
18%
No. of Respondents
Service Quality Flexibility Maturity Returns
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11. Do you have any other Investment/Insurance policy?
PROFILE BASIS NO. OF RESPONDENTSa. Yes 67
b. No 23
Graph No. 13
OBSERVATION:
II observed that in during my training 81% has Investment plans alreadyand many of people has their policy from private companies rather thangovt. companies.
81%
19%
No. of Respondents
Yes
NO
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12. From which Company
PROFILE BASIS NO. OF RESPONDENTS
a. ICICI Prudential 33
b. HDFC Standard Life 23
c. Bajaj Alianz 16
d. Other 18
Graph No. 14
OBSERVATION:
Respondents Percentage
ICICI Prudential 33 37%
HDFC Std. Life 23 25%
Bajaj Allianz 16 18%
Other 18 20%
Total 90 100%
37%
25%
18%
20%
No. of Respondents
ICICI Prudential HDFC Standard Life Bajaj Alianz Other
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OBSERVATION &
FINDINGS
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Observation & Findings
Maximum people were not ready to investment because they already
invested their money in March due to tax benefit.
The second reason was due to political uncertainty stock market is
highly volatile hence people were very scared for investment
Maximum people were interested in private sector for invest their
money.
The most of people made aware by Investment Promotion, Financial
Consultants and Agents.
Most of respondents admitted that they take plan or like to take
Investment plans because of its tax free nature.
Company is getting its most of business in Investment from ULIP and
Fixed deposit.
Respondents admitted that the product awareness which is provided
through intermediaries is high.
I observed that many of respondents agreed that down stock period is
a buying opportunity.
Product awareness of ICICI bank is very high.
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LIMITATION
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LIMITATION
Due to declined stage people were not interested to do investment.
Mostly people were opt Investment or insurance plans in march due to
tax saving because tax benefit is the most important factor for opting
Long term investment plans or insurance policies.
Some of the people provide false data as they were scared about
providing actual data.
Getting appointments with the people was difficult as most of the
people were busy and it was difficult to contact them again and again.
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RECOMMENDATIONS
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RECOMMENDATIONS:
The creation of awareness about the need and importance of modern
Investments is vital.
New product innovation, low money investment plans and better
service is crucial for the company to increase its market share.
Become more creative in capturing a wider range of customer by using
multiple distribution channels.
ICICI bank is giving more stress on employees and providing more
than enough target to employees which is very hard to achieve so
bank should give less stress and realistic target.
Bank should give speed to their market research process. For this they
should recruit young & enthusiast persons.
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CONCLUSION
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CONCLUSION
Change is very important and one whose goes which the changing
environment always succeeds, that is what I have learnt from the study. The
competition has grown too much in the Investment Sector with the opening
of the sector.
On the basis of the project I can conclude that today, the market
scenario is totally change because people becoming more aware about new
Investment plans which provides better growth and more tax benefit. In
earlier we invested our money in like FD, Kisan Vikas Patra, Providend fund,
Saving account and etc. but after some time of globalization we want to
invest our money in modern investment plans like Stock market, ULIP, MFs,
SIP, Commodities, Real Estate and etc. So people are moved gradually into
that financial market because it is more attractive.
when I joined the Summer Internship project that time market in the
declined scenario and inflation rate was going up everyday so I had to face
some difficulties for convinced to people for taking Investment because
people were scared to invest their money in financial market The another
factor is most of the people invested their money in march due to tax saving
and some of the people were not aware to ULIP and MFs.
However, It was a great experience for me because where I could
learn more about the banking culture and how the employees are working
and achieving the goal.
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BIBLIOGRAPHY
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BIBLIOGRAPHY
Reference Books
Marketing management : Philip Kotlar
Research and Methodology : C.K. Kothari
Direct Taxes : Dr. Vinod K. Singhania
&
: Dr. Kapil Singhania
Newspapers:
Times of India
Business Standard
Websites:
www.icicibank.com www.iciciprulife.com www.icicipruamc.com www.iloveindia.com
www.stockmaster.com
Search Engine:
www.google.com
www.wikipedia.com
Others:
ICICI Banks related products and manual
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ANNEXURE
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ANNEXURE
Name.
Occupation
Contact No....
Marital Status
1. In which Sector do you prefer to invest your money?
a. Private Sectorb. Government Sector
2. Which type of Investment plan do you prefer?f. Bank FDg. ULIP(insurance products)h. Mutual Fundi. Stock Market j. SIP(Systematic Investment Plan)
3. How much term of Investment Plans do you like most?e. 0-3 yearsf. 3-6 yearsg. 6-10 yearsh. Above 10 years
4. What do you see in long term Investment plans?e. Growth
f. Risk Coverg. Tax Benefith. All of the above
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5. How much risk do you prefer in Investment Plans?d. High Risk
e. Moderate Riskf. Low Risk
6. Have you ever used Mutual Fund as an Investment before?b. Yesc. No
7. Do you consider Inflation a significant risk?c. Yesd. No
8. Is a down period in the Stock Market a buying opportunity?c. Yesd. No
9. Is Private Life Insurance Company reliable for Investment?c. Yesd. No
10.What are the factors on which Private Life InsuranceCompany differs from LIC?
e. Service Qualityf. Flexibilityg. Maturity Periodh. Returns
11. Do you have any other Investment/Insurance policy?a Yes