PROJECT REPORT

ON

CHANNEL DEVELOPMENT

OF TIED AGENCY

OF

ICICI PRUDENTIAL LIFE INSURANCE

COMPANY

Submitted To:

Submitted By:

Dr. Vinod kumar Bishnoi LOKESH KUMARReader, Haryana School of businesss MBA (2006-08)

I. Types of Orders

Market Orders:A market order is an order to buy or sell at the current exchange rate quotation. If unable to fill the order at the specified rate, you may receive a new price representing the current market rate.

Market orders are usually filled in less than 10 seconds depending on market conditions. During heavier market conditions, market orders are typically processed in less than thirty seconds. Clients often do not wait more than thirty seconds in order to have their trade confirmed or to receive a market has moved message. 

Entry Orders:An entry order is an order that is executed when a particular price level is reached and/or broken. These orders will remain in effect until the client cancels the order.

Stop Entry Orders:Stop entry orders are executed when the exchange rate breaks through a specific level. The client placing a stop entry order believes that when the market's momentum breaks through a specified level, the rate will continue in that direction.

Limit Entry Orders:Limit entry orders are triggered when the exchange rate touches a specific level. The client placing a limit entry order believes that after touching a specific level, the rate will bounce in the opposite direction of its previous momentum.

Stop-Loss Order:A stop-loss is an entry order linked to a specific position for the purpose of stopping the position from accruing additional losses. A stop-loss order placed on a Buy position is a stop entry order to Sell linked to that position. A stop-loss order remains in effect until the position is liquidated or the client cancels the stop-loss order. The execution of a stop-loss order may involve a degree of slippage, depending on market conditions.

Limit Order:A limit order is a limit entry order linked to a specific position for the purpose of locking in the gains on an existing position. A stop-loss order placed on a Buy position is a stop entry order to Sell that position. A stop-loss order remains in effect until the position is liquidated or the client cancels the stop-loss order.

 

II. Forex

III. The Cash Foreign Exchange Market

Trading the Foreign Currency Market for Greater Investment Opportunities

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IV. What is Forex?

The Forex market is a cash inter-bank or inter-dealer market established in 1971 when floating exchange rates began to materialize. The simplest definition of foreign exchange is the changing of one currency to another. In comparison to the daily trading volume averages of $300 billion in the U.S. Treasury Bond market and the less than $10 billion exchanged in the U.S. stock markets, the Forex market is huge; in September 1992 The Wall Street Journal estimated the trading volume at $1 trillion per day. Today, it is believed to have grown in excess of $1.5 trillion per day.

The most important foreign exchange activity is the spot business between the dollar and the four major currencies (British Pound, Eurodollar, Swiss Franc, and Japanese Yen). Participants in the market consist of five main groups: central banks, commercial banks, other financial institutions, corporate customers, and brokers.

But Forex is not a "market" in the traditional sense. There is no centralized location for trading activity as there is in currency futures. Trading occurs over the telephone and through computer terminals at hundreds of locations worldwide.

 

 

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CFDs o What are CFDs o Our CFD Account o How CFDs Work o Range of Markets o Margin and Payments o Types of Order o Market Information Financial Spread Betting o What is Spread Betting o Our Financial Spread Betting o How Spread Betting Works o Range of Markets o Margin and Payments o Types of Order

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o Market Information Open an Account Our Charges Trading Demo Seminars

Financial Spread Betting Types of Order

This section details the various order types available.

Orders can be placed online and by telephone and it is possible to leave orders to be executed once your price condition has been met. It is important to understand exactly what conditions affect the execution of orders (see “Important information regarding orders” and/or contact the Customer Services Team). Orders broadly fall into two categories; Limit orders and Stop orders.   Limit orders Limit orders are orders which are placed at a better price to you than the prevailing price. For example, an order to buy at a price below the current price or sell at a price above the current price. Unless attached to an open position, they will be active unless executed or removed. 

 Stop orders These are orders which are placed at a worse price than the prevailing price. For example, an order to buy at a higher price than the current price or sell at a lower price than the current price. Stop orders are often used to limit possible losses known as Stop Loss orders which are attached to an open position but can be used to open new positions at market points which may see a reversal of recent trends. Unless attached to an open position, they will be active unless executed or removed. 

 Stop Loss orders These are orders which are attached to open positions. If the order is executed, it will close all or part of the open position (crystallise a loss). If the open position is closed, the Stop Loss order is automatically cancelled. 

 Linked Limit order As the name suggests, these are Limit orders specifically attached to open positions. If the order is executed it will close all or part of the open position (crystallise a profit). If the open position is closed, the Linked Limit order is automatically cancelled. 

 One Cancels the Other order OCO orders (One Cancels the Other) allow you to link a Stop Loss order and a Limit order to an open position. This is generally used to control possible losses with the Stop Loss order and take possible profits with the limit order. If one of the orders is executed, the open position is

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closed and the remaining order is automatically cancelled. OCO orders can also be used to link two opening orders. 

 Guaranteed Stop Loss orders These are Stop Loss orders where the agreed level will be the price at which the order is executed regardless of any gapping (see “Important information regarding orders”) in the market or TD Waterhouse Financial Spread Betting trading hours. An additional spread or charge (Limited Risk Premium) is charged (on opening the bet) in connection with a Guaranteed Stop Loss order. 

 Important information regarding orders Orders are monitored and executed on the basis of the TD Waterhouse Financial Spread Betting quote (known as “our quote”), e.g. a Stop Sell order would be triggered for execution when our bid price meets the trigger price. We will then execute at the next price available in the underlying instrument. For reasons as outlined, the execution price of an order may be different to the specified trigger level. This is known as “gapping” in the professional markets and is a risk which falls on the customer. Generally, this does not occur or the price difference is small, however there are circumstances when the execution price may be quite different to the specified level as follows; (i) If the underlying instrument is experiencing a period of very poor liquidity or high volatility. This can occur particularly around the release of key market statistics or company announcements. (ii) Orders are only monitored and executed during TD Waterhouse Financial Spread Bettingmarket trading hours (not necessarily underlying market trading hours). In the case of markets which continue to operate outside of TD Waterhouse Financial Spread Betting hours we will execute any triggered orders at the first available price in our opening hours, which may be substantially different to the order level. However, if the market has moved beyond the trigger level and returned by the time that TD Waterhouse Financial Spread Betting re-opens, the order will not be executed. Orders that are left on the basis of “Our Quote” on markets which TD Waterhouse Financial Spread Betting quote as Grey Markets (i.e. those we quote outside of the hours of the underlying market) will be executed if the out-of-hours price reaches your order trigger level. The TD Waterhouse Financial Spread Betting price for such Grey Markets is determined by TD Waterhouse Financial Spread Betting in the light of prevailing, related markets (e.g. the US markets may determine the Grey Market FTSE price). Orders which are left to open a position are subject to normal credit procedures. If an order to open were to result in additional margin being required, the trade may not be opened at the absolute discretion of TD Waterhouse Financial Spread Betting. Equally Stop Loss orders may not be moved, at the absolute discretion of TD Waterhouse Financial Spread Betting, if it were to result in a margin call. Obviously this section does not detail every aspect of Financial Spread Betting with TD Waterhouse Financial Spread Betting. For full information, please refer to our Market Information Sheets and Terms of Service.The web pages within this area are issued by TD Waterhouse CFDs and TD Waterhouse Financial Spread Betting

which are trading names of City Index Limited (CI), who is a provider of contracts for difference (CFD) trading and financial spread betting and whose head and registered office is Moorgate Hall, 155 Moorgate, London, EC2M 6XB. For the purposes of CFD trading and financial spread betting any contract is between you and CI and all

dealing, administration and settlement is carried out by them and TD Waterhouse Investor Services (Europe) Limited are not responsible for any of the functions they perform. Your

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account is held with City Index Limited (CI), which is authorised and regulated by The Financial Services Authority (FSA Registered Number: 113942). Any references on these pages to TD Waterhouse CFDs Trading Service, TD

Waterhouse CFDs Trading, TD Waterhouse CFDs, TD Waterhouse Financial Spread Betting mean the trading service carried out by CI under those names.

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A. 19-Feb-2008

1. Online Banking:Regulatory framework in India

This particular post is a modified version of an abstract prepared for a conference on Online banking. During the research I could found that the literature on regulatory aspect on online baking is very less. I thank Kalpit for working with me for this post.

Shedding the conventional brick and mortar banking style, the Indian banking has entered the new forte of online/internet banking, though of late. This being the transition period, the banking community is facing immense challenge and issues of feasibility also pop-up.

I. Feasibility of Online banking in India

The redtapism in public sector banking and lesser consumer base is being attributed to as the reasons for the Indian banks to enter into the online banking this late. With the rapid development in the technological infrastructure (security, confidentiality is being mainly referred to) and the legal framework being better equipped, the online bank has become a feasible mode of banking in India.

Regulatory framework in India has gone a long way forward, with the Information Technology Act 2000 attempting to address a number of e-commerce regulatory issues, address the need for banks to go online and have laid out security measures to be adopted (since online baking is overlapping with e-commerce on most occasions and having to deal with cross-border jurisdictions), and with the comprehensive and forward looking guidelines brought out by the RBI.

Along with the favorable scenario in the techno-legal aspect and the increasing internet consumer base has taken the trend of online banking from basic information dissemination service to fund-based transactions on their accounts, hinting at the ample growth prospect of online banking in India.

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II. Challenges

In the Internet banking system, information is considered as an asset and so worthy of protection. However, the present system of authentication does not address the security aspect in full. This calls for an urgent need to acclimatize the whole system.

According to Online Banking Association, member institutions rated security as the most important issue of online banking. There is a dual requirement to protect customers' privacy and protection against fraud. Another major issue is that of Data Protection and the need for a legal and regulatory framework.

Currently, India has no law on data protection. Information security in e-banking presents two main areas of risk: preventing unauthorized transactions and maintaining integrity of customers’ transactions. Data protection falls in the latter. Data protection laws primarily aim to safeguard the interest of the individual whose data is handled and processed by others. ‘Interests’ are usually expressed in terms of privacy, autonomy and/or integrity.

The Information Technology Act, 2000 does not address this issue. India should take cue from nations, which have favored ad hoc enactment of sectoral laws over omnibus legislation. Along with these issues, the contradictory issues present in the Banking Regulations Act, 1949, the Reserve Bank of India Act, 1934 and the Foreign Exchange Management Act, 1999 need also to be looked into.

On the technological front the Indian Internet banking system is facing many hurdles. The problems include operational risks, security risks, system architecture risks, reputational risks and legal risks. Phishing is another issue that needs attention. Experts suggest that simple rules such as not sharing login IDs and passwords with anyone, would keep customers safe.

III. Future

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It would obviously take much time before the online banking could be called a fully alternative banking mode to the conventional one. Legal and cross-border risks can be avoided through proper customer identification devices, information screening techniques, periodic reviews on compliance with various laws, and gaining knowledge of various national laws (applicable) and guide the customers through their cross-border dealings. The compliance part and policy regulation part should be assured by the RBI and the need for a data protection law cannot be denied.

The security issues can be tackled by having the bank's systems technologically equipped to evade operational and security risks. Reputational risks can be prevented by testing of the system before implementation, developing contingency plans (to handle system disruptions, system hackers, security lapses and virus attacks) and creating back-up facilities. Customer education and awareness also need to addressed, as unless the customers are taken into confidence and made comfortable with the working of online banking all the technological development will go in vain.

P e n n e d b y D e v a P r a s a d O N 1 9 . 2 . 0 8

C a t e g o r y : B A N K I N G L A W

0 R E S P O N S E S :

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Stock Market Operation and Trading system in India

(National Stock Exchange and Functions)

Caution:

This is only some information to investors. For a detailed updated information please refer the web sites of National Stock Exchange or The Stock Exchange, Mumbai.

 

Introduction:-

            NSE is India’s leading stock exchange covering more than 160 cities and towns across the country.  It provides a modern fully computerized trading system designed to offer investors across the length and breadth of the country a safe and easy way to invest to liquidate investment in securities.  The need for setting up the National Stock Exchange arose from concerns of investors with

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the state of existing trading and settlement facilities.  Investors in many areas of the country did not have the same access and opportunity to trade as their counterparts in Mumbai or the main metros.  The NSE network has been designed to provide equal access to investors from anywhere in India and to be responsive to their needs.  This translates into a single dynamic market across the country with greatly enhanced liquidity, unparalleled transparency and safety.  Investors located in remote corners of the country are now able to transact with investors across the country with ease and efficiency.

            At the National Stock Exchange we strive to continuously upgrade our service levels and make the system more investor-friendly.  This booklet addresses common concerns and queries raised by investors.

 Trading System

 

1. Electronic Trading:

             NSE introduced for the first time in India fully screen based trading, thereby eliminating the need for physical trading floors.  The brokers can now trade from their offices wherever they are located.  They are connected to the Exchange from their workstations to the central computer located at the Exchange via. Satellite using VSATs (Very Small Aperture Terminals).  Buy and sell orders from the brokers reach the central computer located at NSE matched by the computer.

 

2. Type of instruments are traded:

             The following type of instruments are traded at NSE: (a) Equity shares (b) Preference shares (c) Debentures, Deep Discount Bonds etc. (d) Warrants (e) Units of mutual funds.

 3. Can shares of any company be bought or sold on the NSE

            As of now, more than 1400 companies are available for trading on the NSE.  NSE is a national market and hence our endeavor is to provide for trading shares that have a regionally well-dispersed interest.  The companies are selected based on their paid-up capital, market capitalization, dividend payment and a good track record.  The criterion is meant to ensure that only companies that meet certain standards are listed.  This list is reviewed at periodic intervals.

V. N S E-50 Index

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             The N S E-50 Index is a market capitalization weighted index comprising 50 scientifically selected stocks having the highest liquidity and largest market capitalization.  Each stock has been given a weight in the index equivalent to its market capitalization.  The capitalization of 50 stocks as an 3rd November 1995 is taken as the base capitalization and this value is set at 1000.  Daily price change in index securities is captured in the market capitalization figure and reflected in terms of index movement.  The index value compares the day’s market capitalization vis-à-vis base capitalization and indicates how prices in general moved a period of time.

 Brokers 

5. How many brokers operate on the N S E ?

             The Exchange has 1029 SEBI registered trading members operating from over 160 towns and cities all over the country.  Many of these registered brokers have authorized and registered sub-brokers.  You should execute your deal through a registered broker a registered broker a recognized stock exchange or though a SEBI registered sub-broker.

 6. How do I deal with a registered sub-broker?

             You should send your request for purchase or sale of securities.  The sub-broker on executing your order provides you with a purchase/sale note.  This purchase/sale note originates from the contract note, which is issued by the main broker to the sub-broker.  The purchase/sale note would help in resolving any disputes with the sub-broker.

 7. Will a small investor who deals through a sub-broker get bounced back and forth between the broker and the registered sub-broker in case of a problem?

             Several measures have been put in place to tightly couple the broker/sub-broker relationship.  Though your order is placed through the sub-broker, the main broker has to take complete responsibility for your transaction.  If your problem does not to take complete satisfactorily by the sub-broker you should approach the main broker and he would be legally bound to redress your problem.

VI. Agreement with Constituents

 8. What are the formalities for becoming a client of a broker/sub-broker?

             All investors should sign a broker-client agreement (copy available with all NSE brokers) and a client registration from before dealing through a broker with necessary documentary support of proof of identify, letter from the bank giving account details, PAN/GIR No. etc.  This agreement is mandatory.  The procedure is the same when dealing with a registered sub-broker.  The features of this agreement, which reduce the chances of any dispute, are terms and conditions, which relate to order or trade confirmation, brokerage charged by a broker and delivery of securities and funds.  You

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should carefully read the various terms and conditions and understand their implications before entering into an agreement with a broker. 

9. What precautions are to be taken in singing a broker-client agreement?

             (a) Check whether it is on a stamp paper of the requisite value. 

            (b) Check whether the names of both parties have been mentioned in the agreement.

            © Check whether both the parties and their authorized representatives have signed on all the pages of the agreement.  Also, check that the witnesses of both the parties have signed and put their names against their signature.

            (d) Check whether the stamp paper is valid (for eg.validity in Maharashtra is 6 months from the date of issue of the stamp paper) and ensure that the date of agreement should not be prior to the date mentioned on the stamp paper.

            (e) Check whether the Trading Member or their representatives have the Authority (such as Board Resolution, Power of Attorney, etc.) to sign the Member Constituent Agreement.

 

VII. Brokerage

 10. What is the maximum brokerage that a broker/sub-broker can charge?

             The maximum brokerage chargeable, as stipulated by SEBI, is at present 2.5% of the trade value.  This maximum brokerage is inclusive of sub-brokers brokerage, which shall not exceed 1.5% of the trade value.  The brokerage and service tax are indicated separately in the contract note.

 11. What are the levies a broker can charge to the investor in addition to the brokerage?

             The broker can charge the service tax @ 5% of the brokerage to the investor.  The broker can also charge the transaction charges levied by NSE and other penalties arising on behalf of the client will be charged to the client.

VIII. Contract Note

 12. Contract Note:

             It is a confirmation of trade(s) done on a particular day for and on behalf of a client.  A contract note issued in the prescribed format and manner establishes a legally

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enforceable relationship between the member and client in respect of the trades stated in that contract note.  Contract notes are made in duplicate, and the member and client both keep one copy each.

 

13. What are the points to be checked by an investor to check the validity of contract note?

             Name and address of trading member, their SEBI registration number, details of trade like order no., trade no., trade time, security name, quantity, rate, brokerage, settlement no., details of other levies, signature of authorized signatory and the arbitration clause stating that the trade is subject to the jurisdiction of Mumbai must be present on the face of the contract note.

 

IX. Corporate Benefits

 14. Book closure/Record date

             The ownership of shares of companies traded on the stock exchanges is freely transferable by registration.  However, buyers many times hold shares without sending it for registration to the company.  In order to be entitled to the benefits such as dividend, bonus, rights etc. announced by the company, a buyer would need to send it for registration.  The company announces cut off dates from time to time.  The lost of members on the companies registers as of these cut off dates would be the people entitled to the corporate benefits.

 

15. Book closure vs. record-date

Name of theCompany

Book Closure (BC)/Record Date (RD)

No Delivery period

Ex-Date Purpose

  Start       Date

End      Date

Start       Date

End      Date

   

ACC 03.Jan.96 03.Jan.96 13.Dec.95

26.Dec.95

13.Dec.95 Int.Dividend30% (RD)

ACC 06.Jul.96 30.Jul.96 12.Jun.96 09.Jul.96 12-Jun.96 Bonus 3.5%/Dividend 40% (BC)

                      

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             ACC announced a Book Closure (BC) for the period 6th July to 30the July’96.  During this period, the company had closed its register of security holders.  This was done to determine the number of registered members who were eligible for the bonus 3:5 and a Dividend of 40%.  The process of transfer of shares was operational till 5th July’96.  The Exchange announced a no delivery period from 12 th June to 9th July’96 before the book closure.  During this period, trading was permitted in the securities but the trades were settled only after 9th July.  Hence, the buyers of the shares were not eligible for the Bonus 3:5 and a 40% Dividend.  The first day of the no delivery period is considered as an Ex-date since the buyer of the shares is not eligible for the purpose benefits for this BC.

 

            The same logic holds good for record date but the two main differences are in case of a record date, the company does its register of security holders.  Record date is a cut off date (in the above example 3rd Jan’96) for determining the number of registered members who are eligible for the corporate benefits (Interim dividend (30%).  Secondly, in case of book-closure, shares cannot be sold on an exchange bearing a date on the transfer deed earlier than the book-closure.  This does not hold good for the record date.

 

16. No-delivery period:

             Whenever a book closure or a record date is announced by a company, he NSE sets up a no-delivery period for that security.  During this period, trading is permitted in the security.  However, these trades are settled only after the no-delivery period is over.  This is done to ensure that investor’s entitlement for the corporate benefits is clearly determined.

 

17. Ex-date:

             The first day of the no-delivery period is the ex-date viz. if there is any corporate benefit such as rights, bonus, dividend etc.  announced for which book closure/record date is fixed, the buyer of the shares on or after the ex-date will not be eligible for the benefits.

 

18. ‘New share dividend’ deducted from the sale price of shares

             In a case a company issues new shares during a financial year, these shares, unless specified otherwise, are entitled only for pro date dividend in respect of the financial year in which these are issued.  The old shares and new shares of the company

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thus carry disproportionate rights as to dividend, although their market price remains the same.  To compensate, the buyer to whom these new shares are delivered for loss of pro rata dividend, the seller of new shares has to pay to the buyer, the dividend declared in respect of old shares.  This old-new compensatory value (ONCV) is referred to as ‘new share dividend’.

 

19. How does one ascertain that the dividend received /paid on a certain is correct

             The Exchange publishes a lost if the scrip’s those are eligible to receive pro-rata dividend (non pari-passu) per settlement. The list contains the details pertaining to the distinctive nos. and the rate of dividend payable.  This could be obtained from the broker to cross check any dividend deducted from the seller’s account.

 

X. Market Operations

 20. I execute an order on the NSE

             Choose the broker you want to trade with and enter into broker-client agreement and fill in the client registration form.  Place orders with the broker in writing.  Ask for the order confirmation slip on the day the order is placed.  Ask for trade confirmation slip on the day the trade is executed.  Ask for contract note at the end of the trade date.  Ensure smooth settlement of the trade by delivering securities and funds on time to your broker.

 

21. Does the system give lower priority to small orders as against big orders.

             In fact you will be surprised to know that the NSE trading system treats all quantities like.  For example if you have placed a buy order for 100 shares of company A @ Rs.3500 and a big investor places another buy order for 10000 shares of company A @ Rs.3450 then your order will get priority over the big order.

 

22. Price-time Priority

             The system arranges all orders in the priority of price and within price by time.  You have, let us say placed order for 100 shares of company ‘A’ at Rs.285 and another investor has placed a buy order for 100 shares of company ‘A’ at Rs.290, then anyone who places a sell order in company ‘A’ will be first matched with the second investor as he has given better price.  This is the price priority.  Let us say that both of you have

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quoted Rs.285 as the price at which you want to buy ‘A’, then any sell order which comes into the system, at this price will be matched against the order which was placed list.  This is the time priority.

 23. What is equal access? Do a Guwahati investor and a Mumbai investor get the same price?

             Of Course. That’s what equal access is all about.  The time taken by an investor to access the trading system from any remote place in India is the same as the time taken by an investor in say, Mumbai.  Further, the orders of all investors are accumulated in a central pool wherein the orders are matched on only two criteria – price and time.   To the central computer it is irrelevant whether the order belongs to a Guwahati investor or to Mumbai investor.  There is no scope for getting different price because there are no different markets.  It is one common exchange and one common market wherein all investors irrespective of the location transact on the system.

 24. How does one ascertain the correct rate at which transactions have taken place?

 

            Brokers are obligated to give their clients a trade confirmation slip the moment a trade takes place.  This slip carries the rate which the trade took place. At the end of the day a broker has to issue a contract note, which separately shows the rate at which the trade took place and the brokerage rate.

 25. How do I know my broker is giving me the best price?

            The NSE trading system matches orders in such a way that the order is executed at the best possible price available on the system.  There is no room for human intervention in determining the prices.  This is because the process of matching buy and sell orders is done by the computer.  Further, the system functions on a price-time priority.

 26. The price that I get may be the best price but how do I ensure that the broker does not give me some other clients’ price or his own account trade prices

             Every time an order enters the system, the system generates a unique order number, which cannot e changed.  All you need to do is to collect your order number from the broker and keep track of this order number.  Similarly when a trade occurs a trade confirmation slip is generated and the investor can ask the trading member for his trade number.  This ensures that unique numbers links the order and the trade.  The Exchange maintains such records for eight years and the investor can at anytime check back with the Exchange.

 27. After all this if I still have a problem regarding the prices, deliveries or anything pertaining to my trade, is there somebody I can approach.

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             The exchange has a Help Desk manned by officials of the exchange at all the nine Investor service Centers across the country where you could call in case you need any clarification or if you have any problem relating to the companies whose shares you have bought or sold or the brokers through whom you have bought or sold shares.  The Exchange has an investor grievance mechanism through which any investor’s queries pertaining to the broker and/or company can be resolved.  Further, in cases of disputes between the brokers and clients, which cannot be settled through discussions, a procedure for arbitration has been set up by the Exchange, which will resolve these disputes.  All you have to do is to contact the nearest Investor Service Center of NSE and register your grievance and file an arbitration application in case dispute is unresolved.

 28. What are the documents you should receive from your broker and when?

             Order confirmation slip: After the order has been placed.  Trade confirmation slip: after the trade has been executed.  Contract note: Within 24 hours of the trade being executed.

 29. To what extent price of scrip can increase or decrease in a day and during a settlement

             NSE has stipulated different intra-day and intra-settlement price movement limits to different securities.  For this purpose, the securities have been categorized in the following three groups namely MIN, MID & MAX.  The price band applicable to each group is tabulated below:

 

     BAND Daily Price Band Settlement Price Band 

MAX Band

MID Band

MIN Band

       + 10%

       +   7%

       +   5%

         + 25%

         +  20%

         +   15%

 

             Securities have been classified into various price bands depending on the liquidity profile.  Highly liquid scrip’s have been classified in the MAX band and the highly illiquid securities have been put into MIN band.

             Price bands are a particular limit within which a security can fluctuate on a given day/settlement.  In case of intra-day price band are determined over the previous closing and in case of intra-settlement price band are determined over the closing price of the last day of the previous settlement cycle.

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XI. Clearing & Settlement

 30. Settlement cycle:

             Settlement cycle on the NSE is an account period for the securities traded on the exchange.  The settlement cycle typically commences on a Wednesday and ends on the following Tuesday.  At the end of this period, the obligations of each broker are calculated and the brokers settle their respective obligations as per the rules, byelaws and regulations prescribed by the NSCCL (National Securities Clearing Corporation).

 

31. If I have sold securities when do I deliver them to the broker?

             You have to deliver the securities to the broker immediately upon your getting the contract note for sale but in any case before the securities pay-in day, which is normally held on a Monday.  The exact date/time of delivery may be mutually decided between you and the trading member.

 32. If I have bought securities when do I pay money to the broker?

             If you have bought securities, you have to pay-in funds to the broker in such a manner that the amount paid is realized before the funds pay-in day, which is normally held on Tuesday.  The exact date/time of delivery may be mutually decided between you and the trading member.

 33. When can I expect to receive funds/securities from the broker?

             The securities and the funds are paid out to the broker on the payout day, which is normally held on Wednesday.  The NSE regulations stipulate that the trading member should pay the money or securities to the investor within 48 hours of the payout.

 34. What are the implications if the buyer does not pay funds as well as the buying broker does not pay funds to the exchange

             The Clearing Corporation may penalize the broker for not paying funds for the securities, which has been purchased.  The clearing corporation (depending on the set criteria) may hold back securities against which funds are due.  The broker would also be charged interest on the outstanding amount/penalties.  Where such a non-payment is on account of a client, the broker may pass on the penalties/interest to the buying client and the client would not receive his shares.

 35. Short delivery

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             Short delivery refers to a situation where a client, who has sold certain shares during a settlement cycle, fails to deliver the shares to the member either fully or partly.

 36. Settlement Guarantee Fund

             Regular market deals are cleared ad settled through the NSCCL on behalf of its clearing members.  The Clearing Corporation has set up a Settlement Guarantee Fund through contributions of the TM clearing members.  NSCCL acts as the counter-party to all traders done in the regular market.  However, this fund is intended primarily to guarantee the completion of the settlement up to the normal pay out and will not act as a guarantee for company objection cases i.e. replacement of bad paper or payment of its equivalent financial value.

 

XII. Good & Bad Deliveries

 37. Bad Delivery

             SEBI has formulated uniform guidelines for good and bad delivery of documents.  An exhaustive list of instances of good and bad delivery of documents – transfer deed and share certificate is contained in this list.  To illustrate, bad delivery may pertain to the transfer deed being torn, mutilated, overwritten, defaced, or if there are spelling mistakes in the name of the company or the transferor, ensure or crossing out in the characters of the folio numbers, distinctive number range or certificate numbers, or if the transfer deed is improperly stamped by the delivering trading member etc.

 38. What should I do if receive a bad delivery

             All bad delivery will have to be reported to the clearinghouse by the buying broker within 48 hours of receiving the payout, generally on Friday.

 39. Procedure for handling bad deliveries

             Bad deliveries are picked up by he delivering broker, generally on a Saturday.  The same are required to be rectified or replaced by the delivering broker within a period of 48 hours, generally on the following Monday.  All the rectified/replaced bad deliveries are paid out to the receiving broker, generally on Wednesday.

 40.Is it obligatory on the part of the investor to check that the delivered given to him is good?

             SEBI has issued uniform guidelines for good and bad delivery of documents across all stock exchanges.  These guidelines relate to the various formalities pertaining to the delivery of share certificates accompanies by transfer deed.  A copy of this set of

18

guidelines is available with NSE brokers and Investor Centers and it is your responsibility to ensure that the deliveries made by you and given to you is good.

 41. What factors give rise to an auction?

 There is three factors, which primarily give, rise to an auction: 1. Short deliveries, 2.Un-rectified Bad Deliveries and 3. Un-rectified Company objections.

 42. Auction:-

             An auction is a mechanism utilized by the exchange to fulfill its obligation towards the buying trading members.  Thus, in case for a settlement, the selling trading members have delivered short, their deliveries are bad or they have not rectified the company objection reported against them, the exchange purchases the requisite quantity from the market and gives them to the original buying member.  Auctions are generally held on Wednesday.

 43. If I sell shares in the auction when do I need to deliver them?

 You are required to have the securities “on hand” so as to deliver to the trading member immediately but in any case before the auction securities pay-in day, which is normally on Friday.

 44. And when do I receive the funds if I sell shares in the auction?

             The securities and the funds are paid to the trading member on the auction payout day, which is normally held on Saturday.  The NSE regulations stipulate that the trading member should pay the money or securities to the investor within 48 hours of the payout.

 45. What happens if the shares are not bought in the auction?

             If the shares could not be bought in the auction i.e. if the shares were not offered for sale in the suction, the exchange squares up the transaction as per SEBI guidelines.  The guideline in force stipulates that the transaction is squared up at the highest price on the NSE from the relevant trading period till the auction day or at 20% above the last available closing price on the NSE, whichever is higher.  The pay-in and payout of funds for Auction Square up is held along with the payout for the relevant auction.

 

XIII. Company Objections

 46. Company objections

             An investor sends the certificate along with the transfer deed to the company for registration.  In certain cases the registration is rejected because of signature difference,

19

or if the shares are fake, forged, or stolen, or if there is a court injunction preventing the transfer of the shares etc.  In such cases the company returns the shares along with a letter, which is termed as an objection memo.  All such cases are identified as company objections.

 47. What is a stop transfer case?

             Stop transfer is the process whereby the transfer of securities (shares) is stopped by the company for valid reasons as provided for in the companies Act 1956.  The stop transfer is generally affected by the company on the strength of a copy of FIR or courts order, when the securities (shares) are reported as missing lost/stolen by the holder of the securities (share).

 48. Is a stop transfer case treated differently from a company objection?

             Stop transfer cases are one category of company objections.  In the case of a stop transfer, a company is required to give along with the objection memo supporting documents such as photocopies of the FIR, suit and/or court order to facilitate the trading member to lodge a company objection with the required document.

 49. How are company objections different from fake and forged shares

             Fake and forged shares can be considered to be another category of company objections.  The procedure to be followed is to send company objection stipulating share certified to be fake/forged and sending photocopies of such certificates after defacing the fake/forged certificates.

 50.  What should I do with company objections?

             You should submit the company objection memo along with the share certificates, if received with company objection and other documents/papers received from the company to your broker immediately.  Company objection cases can be reported within 12 months from the date of issue of the memo for the original quantity of shares under objection.  Company objection cases are reported to the clearinghouse on Tuesdays and Wednesdays of every week.

 51. Who has to replace the shares in the case of company objections?

             It is the responsibility of the member who first sold the shares on the exchange to rectify/replace shares under company objection within 21 days of this being reported to the exchange.  The member shall also pay to the buyer value of any benefit such as bonus, rights etc. that may have been announced by the company after he delivered the shares in the exchange for the first time till the date he delivers rectified/replaced shares to the buyer.  Company objection cases, which are not rectified / replaced, are normally auctioned.

20

 Transfer of Shares

 52. Proper transfer Deed

             A deed of transfer is considered proper it if is:

 (a) in the prescribed format

(b) dated by the prescribed authority (e.g., Registrar of Companies), and its validity period has not expired,

© must be duly stamped @ 0.50% of the trade value of the shares as on the date of execution of the transfer deed

(d) duly signed by or on behalf of the transferor and transferee and complete in all respects.

 

53. How does the transfer of shares take place?

             After a sale is effected the share certificate along with a proper transfer deed duly stamped and complete in all respects is sent to the company for transfer in the name of the buyer.  A transfer is complete in the books of the company after the transfer is registered in the share register maintained by the company.

 54. What should I ensure while handing over securities, which I have sold?

             You have to ensure that the transfer deed is of a recent date and not dated prior to the book closure date.  Also, you have to ensure that any other particulars are accurately filled in as contained in the share certificate and if there are any corrections made for the information filled in by the seller, such corrections are properly authenticated by all the sellers.

 55.What is it important to register the transfer of shares with the company?

             All the corporate benefits like dividend, bonus, rights etc. announced by the company are given to those persons whose names appear in the register of members of the company as on the book-closure date or record date announced by the company.  It is therefore important for the buyer to register the ownership of the shares.

 

XIV. Wholesale Debt Market:-

 56. Wholesale Debt Market segment

21

             Wholesale Debt Market or the money market as it is commonly referred to, is a market where pure debt instruments such as Government securities, Treasury bills, Public sector bonds, Corporate debentures, commercial paper, Institutional bonds and a variety of other debt securities are traded.

 57. Who can invest in debt securities?

             Individuals, corporate bodies, institutions, banks, Provident Funds are entitled to invest in the securities available for trading in the WDM segment.  Besides, each security has its on feature and persons eligible to invest and the minimum amount may vary accordingly.

 58. Who are the entitles on the WDM segment?

             There are two types of entities in the system i.e. the Trading members and Participants.  Trading Members who meet the admission criteria for membership to the WDM segment, can place orders & execute trades on the system on their own or on behalf of their clients.  Participants take direct settlement responsibility for the traders executed on the Exchange on their behalf by an NSE trading member.  Participants are large investors such as banks and institutions who are not members of the NSE and cannot therefore directly transact, but effect transactions through the NSE WDM members.

 

59. How do I trade in the WDM segment of NSE?

             All you have to do is to approach a trading member of the WDM segment of the Exchange and give the trading member written instruction (the security, the quantity, the price, the settlement date) for executing your transaction.  On executing your instructions, ask for the order and trade confirmation slips and the contract note and confirm the settlement details with the trading member.

 

XV. Investor Grievances

 

60. What are some of the common investor grievance?

(a)    Non-receipt of shares sent for transfer.

(b)   Non-receipt of corporate benefits.

(c)    Non-rectification of bad delivery by the broker.

22

(d)   Non-receipt of funds/securities on sale/purchase.

(e)    Introduction of fake, forged and stolen securities.

(f)     Non-rectification of company objections.

(g)    Contract notes not issued by the broker.

 

61. What does NSE do in case of investor complaints against companies?

             After initially forwarding the complaints to the company, a consistent follow-up is done.  Companies which have a long history of pending investor complaints are instructed to maintain special personnel to tackle the pending complaints on priority basis.  In certain extreme cases, action like suspension of trading of the securities is also taken.

 62. What does NSE do to investor complaints against brokers?

             In the case of brokers, after they are intimated about the complaints, a reply is expected within 21 days of intimation.  If necessary, further clarifications are asked for and the issue is settled to the satisfaction of the parties involved.  On certain occasions, a personnel hearing is granted to the parties involved to try and solve the matter amicably.  If all efforts to solve the matter amicably fail then the matter will be referred for arbitration.

 63. How can you help in resolving your grievance?

             Remember it is mandatory to sign a broker-client agreement with your broker.  The broker-client agreement that you sign should include the following terms and conditions which relate to order or trade confirmation, brokerage charged by the broker and delivery of securities and funds.  A clearly spelt out agreement reduces the scope for disputes.  A format of the broker client agreement is available wit all NSE brokers.

            Your grievances are easily resolved if your deals are executed through a registered broker of a broker of a recognized stock exchange or a SEBI registered sub-broker.

 64. What expertise does the Investor Grievance cell have?

             Each cell is manned by a team of professionals who are experienced in law, company affairs and capital market, specially trained to listen to you carefully, identify your problem and find and execute a solution quickly.

 65. Does the investor grievance Cell provide timely action

23

             Time taken to resolve a complaint is closely monitored through a unique number given to each complaint.  The IG Cell follows up the matter after intimation of the complaint.  On exhausting all means, if the matter remains unresolved it is put up for arbitration.  An investor is required to maintain all relevant documents and give the complaints in detail along with his/her contract numbers. This would ensure a speedy resolution of the grievances.

 Arbitration

 66. Arbitration:

             Arbitration is a quasi-judicial process that is faster and is an expensive way of resolving a dispute.  The NSE facilitates the process of arbitration between the brokers and their clients.  After both the parties select the arbitrator they are heard by the arbitrator and after due deliberation and after considering the merits of the case an award is given.  This process of resolving a dispute is completed by the exchange within three to four months.

 67. Who are the arbitrators?

             The NSE provides an arbitration panel comprising 20 eminent professional approved by SEBI and monitors the process to ensure a quick resolution.

 

XVI. Depository

 68. What does book-entry segment mean?

             Book entry segment provides settlement facilities for securities that are dematerialized with a depository.

 69. Dematerialization:

             Securities in physical from are cancelled and credited in the form of electronic balances, which is maintained on highly secure systems at NSDL (National Securities Depository Ltd).

 70. NSDL

             The National Securities Depository Ltd. Promoted by IDBI, UTI and the national Stock Exchange of India Ltd. Is the first depository in the country.

 71. Can any share be dematerialized at NSDL?

24

             Shares of only those companies can be dematerialized which have registered for participation with NSDL.

 72. What is the procedure for dematerialization of my securities?

(i)Ascertain from the Depository Participant (DP), whether the securities you hold can be dematerialized.

(ii)Open an account with a DP (as simple as opening a Bank account).

            (iii) Surrender your share certificates to a DP along with a dematerialization request form.

            (iv) Your participation in NSDL system is through a Depository Participant (DP).

 

73. Depository Participant (DP)

             A DP could be a financial institution, bank, and custodian, a clearing corporation, a stockbroker, or a non-banking finance company.  A depository participant is an intermediary between the investor and NSDL and is authorized to maintain your accounts of dematerialized shares.  You can choose any DP.  The list of DPs is ANZ Grindlays Bank, Canara Bank, Citibank N.A., Deutsche Bank A.G., ICICI, IDBI, Infrastructure Leasing & Financial services, Standard Chartered Bank, state Bank of Indian etc.

 74. Can I trade my dematerialized shares?

             NSE provides a facility to trade in dematerialized shares in its book-entry (BE) segment.  This segment offers the facility of a rolling settlement and is the only segment that offers a complete counter-party settlement guarantee for every trade.

 75. Rolling Settlement

             The rolling settlement ensures each day’s trades are settled keeping a gap between a trade and its settlement of a specified no. of working days, which at present is five working days after the trading day.  The waiting period is uniform for all trades.

 76. Are there any hidden costs of dematerialization?

             No, in fact there are hidden savings.  No hassles of bad deliveries, company objections/fake/forged share certificates, quick settlement and transfer of securities; no stamp duty for transfer of shares and reduction in handling and safe keeping costs associated with physical certificates.

25

 77. What is the advantage of trading on the book entry segment as compared to the physical segment?

 

(i) In the book entry segment, the NSE follows a rolling settlement.  This means that every day is trading as well as settlement day.  The settlement, both pay in and pay out of funds and a security is completed 5 working days after the trading day.  The pay in and pay out of securities is done electronically on the same day.  Hence the entire settlement process is completed much faster than in the physical segment.  

             (ii) There is no need for you to send the shares to the company for transfer in your name.

            (iii) There is no stamp duty to be paid for transfer of ownership, unlike in the physical segment.

            (iv) The transaction charges on the book entry segment are lower than the physical segment.

            (v) The pay-in and payout of securities is done electronically, hence, the paperwork involved is considerably reduced.

            (vi) There is no physical movement of paper across cities and hence there is no possibility of loss of shares or theft in transit.

            (vii) There is no possibility of receiving bad deliveries, company objections fake and forged or stolen shares on the book entry segment.

            (viii) Handling costs associated with holding physical shares are eliminated.

 

Summary of Settlement Cycle

 

Day     Particulars                Activity1 - 7 Wednesday-Tuesday Trading period  8   Wednesday Custodians report trades, which they will not

settle.  Such trades will be added to the member obligation

13 Monday Pay-in securities, delivery of documents by the delivering members at the Clearing House.

14 Tuesday Pay-in of funds by members through the Clearing Bank. Shortage identification at

26

Clearing House.15 Wednesday Pay-out day for securities and funds Auction for

shortages.17 Friday Auction pay-in day for securities and funds. 

Bad delivery reporting by the receiving member to the clearing house and intimation to the delivering member.

18 Saturday Auction pay-out Pickup of bad deliveries for rectification.

20 Monday Bad delivery rectification/replacement by the delivering member.

22 Wednesday Auction for bad delivery no rectified/replaced.23 Thursday Bad delivery auction pay-in.24 Friday Bad delivery auction payout.

 

Flow Chart – Investing right in shares

 

1. Choose a conveniently located broker/sub-broker. 2. Make sure the broker/sub-broker has authorized access to the NSE. 3. Sign properly drafted broker client agreement.  You are now ready to buy or sell

shares on the NSE through the broker. 4. Whenever you want to buy or sell shares given written instructions to your

broker. 5. Insist on getting an order confirmation slip the day your order is placed on the

NSE. 6. Insist on getting a trade confirmation slip the day the trade on your order takes

place. 7. Obtain a contract note for the deal, which correctly specifies the price and the

brokerage charged. 8. Deliver shares or money as the case may be well within the specified time frame. 9. Insist on collecting your shares or your money, as the case may be well within the

specified time frame. 10. Contract you’re nearest Investor Service Center in case you need clarification or

you have a grievance.

 

Rights and Obligations of an Investor:-

 

          Rights      Obligations

27

 

1. The right to access

 

The best price,

To speediest service,

The safest form of trading like

Dematerialized shares

 

B. The right to get

Proof of price/proof of brokerage

Charged

Your money on time

Your shares on time

Auction where delivery in normal/

Rectified bad/objection-bad delivery not

Received

Square up where delivery not received

In auction

Shares that are genuine

 

a) The right for redress

Against fraudulent price

 

2. The obligation to be systematic

 

To sign a proper agreement with your

 Broker

 Have every deal recorded on an

 Enforceable contract note.

 

C. The obligations to be correct

Keep your shares in good condition

Keep your signature verification records

Up to date

 

1. The obligation to be timely

Make sure you pay on time when you

Buy

Make sure you deliver shares in time

When you sell

Make sure you pay your broker his

Brokerage charges in time

Make sure to send securities for transfer

28

Against unfair brokerage

Against delays of money or shares

Against investor unfriendly companies

In your name in time

Make sure not to keep blank documents

For over 21 days after the last pay-in

Day stamp affixed on the back side of

The transfer deed.

Make sure to deliver the documents with

All the papers forwarded by the company

Upon getting them from the company

Under company objection

Make sure to extend co-operation where

Fresh T.D. is to be signed against original

T.D.  becoming invalid.

 

 

 

 

(1) The end

 

 

 

 

 

 

29

 

 

 

 

 

 

 

Stock Market History

History of stock market trading in the United States can be traced back to over 200 years ago. Historically, The colonial government decided to finance the war by selling bonds, government notes promising to pay out at profit at a later date. Around the same time private banks began to raise money by issuing stocks, or shares of the company to raise their own money. This was a new market, and a new form of investing money, and a great scheme for the rich to get richer. A little futher on the history tumeline, more specifically in 1792, a meeting of twenty four large merchants resulted into a creation of a market known as the New York Stock Exchange(NYSE). At the meeting, the merchants agreed to meet daily on Wall Street to daily trade stocks and bonds.

Further in history, in the mid-1800s, United States was experiencing rapid growth. Companies needed funds to assist in expansion required to meet the new demand. Companies also realized that investors would be interested in buying stock, partial ownership in the company. History has shown that stocks have facilitated the expansion of the companies and the great potential of the recently founded stock market was becoming increasingly apparent to both the investors and the companies.

By 1900, millions of dollars worth of stocks were traded on the street market. In 1921, after twenty years of street trading, the stock market moved indoors.

History brought us the Industrial Revolution, which also played a role in changing the face of the stock market. New form of investing began to emerge when people started to realize that profits could be made by re-selling the stock to others who saw value in a company. This was the beginning of the secondary market, known also as the speculators market. This market was more volatile than before, because it was

30

now fueled by highly subjective speculation about the company’s future.

This was the pretext for appearance of such stock market giants as NYSE. History books tell us that the reason the NYSE is so highly regarded among stock markets was primarily because they only trade in the very large and well-established companies. It acted as a more stable investment alternative, for people interested in throwing their capital into the stock market arena. The smaller companies making up the stock market formed into what eventually became the American Stock Exchange (AMEX). Contrary to the 80-year old history, today the NYSE, AMEX, NASDAQ and hundreds of other exchange markets make a significant contribution to the national and global economy.

The growth in the number of market participants led the government to decide that more regulation of the stock market was needed to protect those investing in stock. History was made in 1934, when following the Great Crash, Congress passed the Securities and Exchange Act. This act formed the Securities and Exchange Commission (SEC), which, through the rules set out by the act and succeeding amendments, regulates American stock market trading with the help of the exchanges. It also includes overseeing the requirements for a company to issue stock shares to the public and ensures that the company offers relevant information to potential investors. The SEC also oversees the daily actions of market exchanges and how they trade the securities offered.

Although historically, investing in stocks was a “hobby” for the rich, an average person too soon came to realize the value of the investing in stocks vs. traditional assets like land or a house.

Related

History of NYSE Creation of SEC Story of Nasdaq

HOME

© Copyright 2004 RankUHigh

Stock Market History

History of stock market trading in the United States can be traced back to over 200 years ago. Historically, The colonial government decided to finance the war by selling bonds, government notes promising to pay out at profit at a later date.

Around the same time private banks began to raise money by issuing stocks, or shares of the company to raise their own money. This was a new market, and a new form of investing money, and a great scheme for the rich to get richer. A little futher on the history tumeline, more specifically in 1792, a meeting of twenty four large merchants resulted into a creation of a market

known as the New York Stock Exchange(NYSE). At the meeting, the merchants agreed to meet daily on Wall Street to daily trade stocks and bonds.

Further in history, in the mid-1800s, United States was experiencing rapid growth. Companies needed funds to assist in expansion required to meet the new demand. Companies also realized that investors would be interested in buying stock,

partial ownership in the company. History has shown that stocks have facilitated the expansion of the companies and the great potential of the recently founded stock market was becoming increasingly apparent to both the investors and the companies.

31

By 1900, millions of dollars worth of stocks were traded on the street market. In 1921, after twenty years of street trading, the stock market moved indoors.

History brought us the Industrial Revolution, which also played a role in changing the face of the stock market. New form of investing began to emerge when people started to realize that profits could be made by re-selling the stock to others who saw value in a company. This was the beginning of the secondary market, known also as the speculators market. This market was

more volatile than before, because it was now fueled by highly subjective speculation about the company’s future.This was the pretext for appearance of such stock market giants as NYSE. History books tell us that the reason the NYSE is so highly regarded among stock markets was primarily because they only trade in the very large and well-established companies. It acted as a more stable investment alternative, for people interested in throwing their capital into the stock market arena. The smaller companies making up the stock market formed into what eventually became the American Stock Exchange (AMEX).

Contrary to the 80-year old history, today the NYSE, AMEX, NASDAQ and hundreds of other exchange markets make a significant contribution to the national and global economy.

The growth in the number of market participants led the government to decide that more regulation of the stock market was needed to protect those investing in stock. History was made in 1934, when following the Great Crash, Congress passed the

Securities and Exchange Act. This act formed the Securities and Exchange Commission (SEC), which, through the rules set out by the act and succeeding amendments, regulates American stock market trading with the help of the exchanges. It also

includes overseeing the requirements for a company to issue stock shares to the public and ensures that the company offers relevant information to potential investors. The SEC also oversees the daily actions of market exchanges and how they trade

the securities offered.Although historically, investing in stocks was a “hobby” for the rich, an average person too soon came to realize the value of the

investing in stocks vs. traditional assets like land or a house. Related

History of NYSE Creation of SEC Story of Nasdaq

HOME

© Copyright 2004 RankUHigh

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HARYANA SCHOOL OF BUSINESS. G. J. U. S. & T. (HISAR)

32

CHANNELDEVELOPMENT

ACKNOWLEDGEMENT

I am thankful to and owe a deep debt of gratitude to all those who have helped me in preparing this report. I am grateful to Mr. Punit Shekhawat (Channel Development Manager) &

33

Mr. Amit Walia (Agency Manager) and a host of other officials for their active help and cooperation at each stage of the study.

I would also like to thank my parents, family members, colleagues and every one concerned who has been instrumental in successful completion of the project.

Lokesh Kumar

34

EXECUTIV

E

SUMMARY

35

EXECUTIVE SUMMARY

The objective of this project was to assist ICICI

Prudential Life Insurance in expanding their channel

by recruiting Tied Agents for the company. For the

company to successfully continue its operations, it

needs to undergo change to get some new

customers and to get some new ideas. Moreover

insurance is such a growing sector that it has full

potential to have new customers. So it very essential

to have new people in the system which can add

new customers to the company.

This was achieved through a three pronged efforts.

The First objective of the study was to look for

different segments of the people. The Second

objective of the project was to analyze the person

to find whether he is fit for doing insurance.

The Third objective of the project was to finally

introduce some people in the system by

recruiting them as advisors of the company.

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The research methodology consisted of a survey

using simple Questionnaire and personal interview

with the general public at exhibition site mostly

based in Hisar, Hansi and Some Villages. The

questionnaire used is given at the end of report.

I would like to thank my mentor who provided me the opportunity to do some sales for the company which had given me a lot of new experience which will help me in my future.

----------

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CONTENTS

LITERATURE REVIEW-----------------------------------------------

Introduction to Insurance---------------------------------------------Purpose and Need For Insurance------------------------------------Role of Insurance in Economic Development---------------------Classification of Insurance---------------------------------------------

LEGISLATIVE AND REGULATORY MATTERS----------------

IRDA Act, 1999---------------------------------------------------------Constitution of IRDA--------------------------------------------------Functions of IRDA-----------------------------------------------------Life Insurance Corporation of India Act, 1956--------------------

REPORT CARD OF LIFE INSURANCE SECTOR-------------

Report Card: The Current Scenario----------------------------------

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How They Stack Up (Graph) ------------------------------------------

COMPANY’S PROFILE------------------------------------------------

ICICI Prudential Life Insurance Co. Ltd. ---------------------------Distribution--------------------------------------------------------------Products------------------------------------------------------------------About the Partners-----------------------------------------------------

OBJECTIVES OF THE STUDY-------------------------------------- Main Objective--------------------------------------------------------- Sub Objectives--------------------------------------------------------

RECRUITMENT PROCESS-------------------------------------------------- About the Project-------------------------------------------------------

Role of an Advisor------------------------------------------------------Working Environment for an

Advisor------------------------------Opportunity for the Advisor------------------------------------------Characteristics of good insurance sales

person--------------------Extensive Training for the

Advisor----------------------------------

RESEARCH METHODOLOGY-------------------------------------

Research Process-------------------------------------------------------Data Collection---------------------------------------------------------Survey--------------------------------------------------------------------

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FINDING AND DATA ANALYSIS----------------------------------

Age Composition-------------------------------------------------------

Occupation Scenario---------------------------------------------------

Income Scenario--------------------------------------------------------

Most Preferable Investment

Area------------------------------------

Most Important Criteria While

Investment------------------------

Awareness in Life

Insurance------------------------------------------

Most Important Criteria In Life

Insurance-------------------------

Brand Reliability---------------------------------------------------------

SWOT

ANALYSIS--------------------------------------------------------

RECOMMENDATION---------------------------------------------

------

REFERENCES-------------------------------------------------------

----

Questionnaire:

-------------------------------------------------------------

40

LITERATUR

E REVIEW

41

INTRODUCTION TO INSURANCE

WHAT IS INSURANCE?

Insurance is the method of spreading and transfer of

risks.

Losses of unfortunate few are shared by and spread

over to many exposed to the same risk.

Assets created by the owner in expectation of future

needs or benefits have a value.

Loss of assets for any reasons deprives the owner of

the expected benefit.

Insurance in this context is a mechanism that helps to

reduce the adverse consequences due to loss of assets.

PURPOSE AND NEED FOR INSURANCE

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Assets are likely to be destroyed or made non-

functional due to perils like fire, floods, breakdowns,

lightning and earthquake.

Damage to assets caused by any peril is the risk that

assets are exposed to.

Insurance becomes relevant only if there are

uncertainties of occurrence of event leading to loss.

We can say that human life is an income generating

assets which can be lost on early death or disabilities

caused by accidents.

Insurance does not protect the assets but only

compensates the economic or financial loss.

ROLE OF INSURANCE IN ECONOMIC

DEVELOPMENT

Investments are necessary for economic development.

Life insurance plays a major role in mobilization of

public savings.

Savings out of life insurance funds are utilized in

investments for growth.

Looking to general insurance business, industry, trade

would be seriously handicapped in the absence of

insurance cover relating to fire and engineering risks.

CLASSIFICATION OF INSURANCE

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Life is full of uncertainty. Trials and tribulations abound in

each and every aspect of life. No one can truly predict or

even estimate what the future has in store for him. Life

offers no guarantees by itself, except the incidences of

death and taxation.

This lack of security present throughout life can be

overcome partially through insurance. Insurance can never

replace or repair a loss. But the monetary value offered by

insurance helps in adjusting to the new circumstances.

Despite offering innumerable options and immense scope,

insurance can be classified into four main categories.

Insurance of Person

Insurance of Property

Insurance of Interest

Insurance of Liability

Insurance of Person

Under the purview of this class of insurance, the risks

associated with human life in general can be covered up to

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the limit specified. A person can insure his or her life and

his health against any unplanned contingencies.

In event of his death, his dependants will be reimbursed to

the full amount that he was insured for. Or if the insured

person meets with an accident or suffers from an illness

that cripples him forever, he will be compensated with the

complete sum assured anyway since he may not be able to

lead a normal life again.

In case, the accident is not that severe, he should be able to

recover after medical treatment and rehabilitation. If he has

opted for medical cover, then his medical expenses,

treatment and medication will be paid for by his insurance

policy.

Insurance of Property

Everyone possesses material value in the form of tangible

assets. Assets can be in the form of a landed estate or a

vehicle, share holdings or plain old paper money.

Since tangible property has a physical shape and

consistency, it is subject to many risks ranging from fire,

allied perils to theft and robbery. An individual's lifetime of

hard work can be wiped out in a blink of an eye.

But if a person judiciously invests in insurance for his

property prior to any unexpected contingency then he will

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be suitably compensated for his loss as soon as the extent of

damage is ascertained.

Insurance of Interest

Every individual has to discharge certain specific duties.

Everyone is expected to maintain a standard of conduct. But

then, it is an intrinsic part of human nature to err. No one is

infallible and no one will ever be.

Owing to an occasional error or omission committed by us,

our clients or customers might suffer a loss. In turn we

might have to pay those damages or compensation out of

our own personal resources.

However, if our chosen profession qualifies for insurance of

interest, then our insurance policy will more than suffice in

arranging for the funds and court formalities that might

ensue in the aftermath of legal libel.

Insurance of Liability

Every person has to regulate his actions and behavior so as

not to cause injury or damage to other people and their

property. Everyone is personally responsible and liable for

his actions.

If due to lack of control over his actions or prejudiced

behavior, a person incurs any liability then he has to

46

provide compensation out of his personal resources.

Liabilities: legal, civil or criminal can have severe

repercussions on social standing and prestige besides the

financial status.

By investing in liability insurance, an individual can ward off

any liabilities he might incur due to his actions and

behavior. Besides, the premiums payable on liability

insurance are fairly minimal when compared to the

damages that have to be compensated in the long run.

----------

47

LEGISLATIV

E AND

REGULATO

48

RY

MATTERS

INSURANCE REGULATORY & DEVELOPMENT

AUTHORITY (IRDA) ACT, 1999 .

Under this Act an authority called IRDA has been set

up.

This is a corporate body established for the purpose

and objects as set out in the explanation to the title.

The Authority replaces “Controller” under Insurance

Act 1938.

The first schedule amends Insurance Act 1938.

49

It states that if Authority is superseded by Central

Government, the Controller of Insurance may be

appointed till such time as “Authority” is reconstituted.

CONSTITUTION OF IRDA.

The Insurance Regulatory and Development Authority

consists of the following members:

1. Chairperson.

2. Less than five whole time members.

3. Less than four part time members.

Members should be persons of Ability, Integrity &

Standing.

They should have experience in the fields of

1. Life Insurance

2. General Insurance

3. Actuarial Science

4. Finance

5. Economics

6. Law

7. Accountancy

8. Administration

Chairperson, members, officers and other employees of

Authority shall be public servants.

FUNCTIONS OF IRDA

50

1. To issue certificate of registration, renew, withdraw,

suspend or cancel such registration.

2. To protect the interest of policyholders/insured in the

matter of insurance contract with the insurance

company.

3. To specify requisite qualification, code of conduct and

training for insurance intermediaries and agents.

4. To specify code of conduct for surveyors/loss

assessors.

5. To promote efficiency in the conduct of insurance

business.

6. To promote and regulate professional organizations

connected with the insurance and reinsurance

business.

7. To undertake inspection, conduct enquiries and

investigations including audit of insurers and

insurance intermediaries.

8. To control and regulate the rates, terms and conditions

to be offered by the insurer regarding general

insurance business not so controlled by Tariff Advisory

Committee u/s 604 of Insurance Act, 1938.

9. To regulate investment of funds by the insurance

companies.

10. To adjudicate dispute between insurers and

intermediaries of insurance.

51

LIFE INSURANCE CORPORATION OF INDIA

ACT, 1956

Life insurance business was nationalized in India with

effect from 19th January 1956.

The life insurance business of 154 Indian life offices

constituted by 16 non-Indian insurers operation in

India and 75 Provident Societies was taken over by the

Government of India.

LIC of India Act was passed by the Parliament on 18th

June 1956 and it came into effect from 1st July 1956.

----------

52

REPORT

CARD OF

LIFE

53

INSURANC

E SECTOR

REPORT CARD: THE CURRENT

SCENARIO

During the first half of the current financial year, the 13 life

insurers have underwritten first year premium of

Rs.5,43,595.87 lakhs towards 87,38,024 policies. Of this

individual business accounted for Rs.4,41,760.09 lakhs for

87,32,435 policies. The group business accounted for

Rs.1,01,835.78 lakhs for 5,589 policies.

Interestingly about 60% of the business done by the

life insurers during the current financial year has been in

the second quarter. Correspondingly 63% of the policies

underwritten during the six month period have been

accounted for in July to September 2003.

54

Analysis of individual business statistics shows that

LIC accounted 88% of the business in the terms of

premium. As against this the private insurers captured 12%

of the premium. In terms of group business LIC captured

93.63% of the premium. The twelve private insurers

captured only 6.37% of the premium in the total group

business.

A review of the performance of the private players

further reveals of rapid business expansion. The latest

quarterly figures released by the Insurance Regulatory

Development Authority (IRDA) show that ICICI Prudential

Life Insurance Company is continued to lead with a

premium income of Rs.70.2 Crore in the first quarter of this

year followed by HDFC Standard Life Insurance. “The

maximum growth in the first quarter has come from unit-

linked products (ULIP’s) which contributed over 60% of

business, along with retirement products,” said Saugata

Gupta, head of marketing at ICICI Prudential Life

Insurance. She added, “In fact we have identified

retirement solutions and child plans as two growth areas

and have decided to invest the

Resources necessary to raise awareness and build brand

recognition and loyalty in these two segments.”

The insurer has grown its premium income by almost

130% over the corresponding period last year. Similarly

55

Tata AIG Life Insurance has also grown by over 150% in

premium income from April-June 2002 to the same period

this year.

THE PECKING ORDER

COMPANY APR – MAR

2002 – 2003

APR - JUNE

2003 - 2004

ICICI Prudential 365 70.2

HDFC Standard 132.2 34.7

TATA AIG 61 26.5

Birla Sun Life 149 24.2

Allianz Bajaj 53.8 18.2

Max NewYork 76.8 17.5

OM Kotak 31.6 9.4

SBI Life 73 8.5

Aviva 21 7.2

ING Vysya 17.5 4.4

Premium Income Figures in Rs. Crore

56

0

50

100

150

200

250

300

350

400

PR

EM

IUM

INC

OM

E IN

Rs.

Cro

res

ICICIPrudential

HDFCStandard

TATA AIG Birla SunLife

AllianzBajaj

MaxNew York

OM Kotak SBI Life Aviva INGVysya

PRIVATE PLAYERS

HOW THEY STACK UP

APR-MAR 2002-03 APR-JUN 2003-04

57

COMPANY’s

PROFILE

58

ICICI PRUDENTIAL LIFE INSURANCE CO.

ICICI Prudential Life Insurance Company is a joint venture

between ICICI, a premier financial powerhouse and

Prudential, a leading international financial services group

headquartered in the United Kingdom.  ICICI Prudential

was amongst the first private sector insurance companies to

begin operations in December 2000 after receiving approval

from Insurance Regulatory Development Authority (IRDA).

ICICI Prudential’s equity base stands at Rs.525 Crore with

ICICI Bank and Prudential holding 74% and 26% stake

respectively. As of September 30, 2003, the company had

issued over 450,000 policies, with a sum assured

exceeding Rs.11,000 Crore and premium income of nearly

Rs.800 Crore. Today the company is the #1 private life

insurers in the country.

59

DISTRIBUTION

ICICI Prudential has one of the largest distribution

networks amongst private life insurers in India, having

commenced operations in 41 cities and towns in India.

These are: Ahmedabad, Bangalore, Bhopal,

Bhubhaneshwar, Chandigarh, Chennai, Coimbatore,

Dehradun, Goa, Guntur, Gurgaon, Hyderabad, Indore,

Jaipur, Jalandhar, Jodhpur, Kanpur, Karnal, Kochi, Kolkata,

Kottayam, Lucknow, Ludhiana, Madurai, Mangalore,

Meerut, Mumbai, Nagpur, Nasik, Noida, New Delhi, Patiala,

Pune, Rajkot, Surat, Thane, Thrissur, Vadodara, Vashi,

Vijayawada and Vizag.

The company has eleven banc assurance tie-ups, having

agreements with ICICI Bank, Allahabad Bank, Federal

Bank, South Indian Bank, Bank of India, Lord Krishna Bank,

and Punjab & Maharashtra Co-operative Bank, Goa State

Co-operative Bank, Indoor Paraspar Sahakari Bank, Manipal

State Co-operative Bank and Jalgaon People’s Co-operative

Bank, as well as some corporate agents. It has also tied up

with organizations like Dhan for distribution of Salaam

60

Zindagi, a policy for the socially and economically

underprivileged sections of society.

ICICI Prudential has recruited and trained over 25,000

insurance agents to interface with and advice customers.

Further, it leverages its state-of-the-art IT infrastructure to

provide superior quality of service to customers.

PRODUCTS

Insurance Solutions for Individuals

ICICI Prudential Life Insurance offers a range of innovative,

customer-centric products that meet the needs of customers

at every life stage. Its 17 products can be enhanced with

up to 6 riders, to create a customized solution for each

policyholder.

Savings Solutions

- Secure Plus is a transparent and feature-packed savings

plan that offers 3 levels of protection.

- Cash Plus is a transparent, feature-packed savings plan

that offers 3 levels of protection as well as liquidity options.

- Save n Protect is a traditional endowment savings plan

that offers life protection along with adequate returns.

61

- CashBak is an anticipated endowment policy ideal for

meeting milestone expenses like a child’s marriage,

expenses for a child’s higher education or purchase of an

asset.

Protection Solutions

LifeGuard is a protection plan, which offers life cover at

very low cost. It is available in 3 options - level term

assurance, level term assurance with return of premium

and single premium.

Child Solutions

Smart Kid child plans provide guaranteed educational

benefits to a child along with life insurance cover for the

parent who purchases the policy. The policy is designed to

provide money at important milestones in the child’s life.

SmartKid child planed are also available with in unit-linked

form - both single premium and regular premium.

Market-linked Solutions

- Life Link is a single premium Market Linked Insurance

Plan which combines life insurance cover with the

opportunity to stay invested in the stock market.

- LifeTime offers customers the flexibility and control to

customize the policy to meet the changing needs at

62

different life stages. It offers 3 investment options - Growth

Plan, Income Plan and Balanced Plan.

Retirement Solutions

- Forever Life is a retirement product targeted at

individuals in their thirties.

Market-linked retirement products

- LifeTime Pension is a regular premium market-linked

pension plan

- Life Link Pension is a single premium market-linked

pension plan.

Single Premium Solutions

- Assure Invest is a single premium savings product with

life cover for terms of 5, 7 or 10 years.

- Re Assure is a retirement product for senior citizens who

are on the verge of retirement or have just retired.

ICICI Prudential also launched ''Salaam Zindagi'', a social

sector group insurance policy targeted at the economically

underprivileged sections of the society.

Group Insurance Solutions

ICICI Prudential also offers Group Insurance Solutions for

companies seeking to enhance benefits to their employees.

63

Group Gratuity Plan: ICICI Pru's group gratuity plan

helps employers fund their statutory gratuity obligation in a

scientific manner. The plan can also be customized to

structure schemes that can provide benefits beyond the

statutory obligations. 

Group Superannuation Plan: ICICI Pru offers a flexible

defined contribution superannuation scheme to provide a

retirement kitty for each member of the group. Employees

have the option of choosing from various annuity options or

opting for a partial commutation of the annuity at the time

of retirement.

Group Term Plan: ICICI Pru’s flexible group term solution

helps provide affordable cover to members of a group. The

cover could be uniform or based on designation/rank or a

multiple of salary. The benefit under the policy is paid to the

beneficiary nominated by the member on his/her death.

Flexible Rider Options

64

ICICI Pru Life offers flexible riders, which can be added to

the basic policy at a marginal cost, depending on the

specific needs of the customer.

1. Accident & Disability benefit: If death occurs as the

result of an accident during the term of the policy, the

beneficiary receives an additional amount equal to the sum

assured under the policy. If the death occurs while traveling

in an authorized mass transport vehicle, the beneficiary will

be entitled to twice the sum assured as additional benefit.

2. Accident benefit: This rider option pays the sum

assured under the rider on death due to accident.

3. Critical Illness Benefit: protects the insured against

financial loss in the event of 9 specified critical illnesses.

Benefits are payable to the insured for medical expenses

prior to death.

4. Major Surgical Assistance Benefit: provides financial

support in the event of medical emergencies, ensuring that

benefits are payable to the life assured for medical expenses

incurred for surgical procedures. Cover is offered against

43 different surgical procedures.

5.  Income Benefit: This rider pays the 10% of the sum

assured to the nominee every year, till maturity, in the

event of the death of the life assured. It is available on

Smart Kid, Secure Plus and Cash Plus.

6. Waiver of Premium: In case of total and permanent

65

disability due to an accident, the premiums are waived till

maturity. This rider is available with Secure Plus and Cash

Plus.

ABOUT THE PARTNERS

ICICI Bank (NYSE:IBN) is India’s second largest bank with

an asset base of Rs. 3446.58 billion as on March 31,

2007. ICICI Bank provides a broad spectrum of financial

services to individuals and companies. This includes

mortgages, car and personal loans, credit and debit cards,

corporate and agricultural finance. The Bank services a

growing customer base of more than 7 million

customer accounts and 5 million bondholders’ accounts

through a multi-channel access network. This includes

about 950 branches and extension counters, 3300

ATMs, call centres and Internet banking

(www.icicibank.com). ICICI Bank posted a net profit of

Rs.1, 206 Crore for the year ended March 31, 2003.

ICICI Bank is the only Indian company to be rated

above the country rating by the international rating agency

Moody’s and the only Indian company to be awarded an

investment grade international credit rating. The Bank

66

enjoys the highest AAA (or equivalent) rating from all

leading Indian rating agencies.

Established in 1848, Prudential is a leading international

financial services company in the UK, with some US$251

billion funds under management and more than 20

million customers worldwide. Prudential has brought to

market an integrated range of financial services products

that now includes life assurance, pensions, mutual funds,

banking, investment management and general insurance. In

Asia, Prudential is UK’s largest life insurance company with

a vast network of 23 life and mutual fund operations in

twelve countries – China, Hong Kong, India, Indonesia,

Japan, Korea, Malaysia, Philippines, Singapore, Taiwan,

Thailand and Vietnam. 

Objectives of the study

Main Objective –

Recruitment of Tied Agents for the company.

Sub Objective –

67

To look for all segments of people so that they can be introduced in the system.

To make Suggestions about A. Improvements in recruitment methods.

B. Making convenient recruitment both for the company and the recruiter.

68

RECRUITMENT

PROCESS

Introduction

The project was to recruit the insurance advisor. The target

was provided by the company so we need to complete that.

During the project a lot of problems were faced. Firstly

69

people were not ready to meet to become the insurance

advisors as there was no such fixed salary which was

provided by the company. People were not ready to give

their full fifteen days for the training. So online training was

asked in they were required to come only for six days still

some people were not ready to give their six days. But some

how 53 people were convinced for the interview and finally

8 people were convinced as the final advisors of the

company. A lot of problems were faced but a lot good

experiences were also undergone. So a lot of learning’s

were gained.

Recruitment Process

First the interview was taken by me. Then a second round

of interview was taken by ASM (Channel Development) and

the unit manager who finalize the person. After this the

person has to fill up a form providing his details following

the training about the insurance as a whole and product

training of the company. After the training he has to give an

examination conducted by the IRDA (Insurance Regulatory

Development Authority). Another examination o the product

of the company conducted by the company itself is also

required to be given. After clearing both the tests he will

get the license to work and act as employee of the company.

70

ABOUT THE PROJECT:

ICICI Prudential is the no. 1. Private life insurance Company with the largest agency force and the maximum no. of policies being sold.

The project is about presenting people with business partnership opportunity by recruiting them as advisors for the ICICIPRUDENTIAL identification of the potential individuals so as to recruit them for the advisors role is an important aspect of the project.

The project is for the period of 6 to 8 weeks and requires recruiting a minimum of 3 advisors for the company.

To be recruited for the role of an advisor the minimum educational requirement is 10+2 Apart from this the candidate must posses:-

Confidence

Self motivation

Persuasion

Urge to be financially independent

Relationship skills

71

It is very important that the potential advisor is able to

Understand his /her roles that are supposed to be performed.

ROLE OF AN ADVISOR

It is important for us to know that what the role that an advisor will play is. At ICICI Prudential, you are an advisor is to:

1. Provide ongoing financial advice for his/her clients: You are an advisor and just like a lawyer or a doctor you advice the client about insurance and finance.

2. Identify future clients: Life insurance is a business of contacts and the advisor constantly needs to know people so that his business expands.

3. Constantly make appointments: Just making contacts willnot be enough to develop a good life insurance business. The advisor needs to meet these contacts and thus should makeappointments on constantly.

4. Conduct financial review meetings with prospects/clients:

As an advisor it is necessary to meet with client not only for the purpose of selling but also to review the need of

72

the client and prospects. Many people would not be in for life insurance today but as time moves they can be requiring one. Similarly an existing client may also be in need of more insurance as responsibilities and liabilities increase.

5. Close sale: Ultimately success is defined as sales. The advisor should lead each appointment towards a sale and close it effectively where in the client is happy on purchasing the insurance solution and feels satisfied with it.

6. Get Reference: As mentioned above – life insurance is contact business the best way to build is through reference which you can take from your prospects and clients alike. Getting reference will help you build a stronger business.

7. Provide service to clients: The role of an advisor truly starts after the sale has been made and servicing the policy sold is the most crucial role of an advisor.

8. Follow internal sales and reporting system: The Company provides tools and systems for the advisor to increase and develop the business in an effective manner.

WORKING ENVIRONMENT FOR ADVISOR

73

World Class Sales Team: The advisor of ICICI became the part of world class sales team they are provided each and every kind of help from there team.

Work From Office Or Resident: The advisor is free fordoing work from any place either he/she can perform work from its own office or its own residence.

Work Full Time Or Part Time: The advisor can do his/her job as part time or full time, this is there own choice.

Commission, Bonus & Incentives: Advisor can earn commission; bonus & incentives according to there own working ability or skills.

Upper Limits On Earning: There is no fixed upper limit on earning of the advisor they can earn up to the sky & for this they have to use there best skills.

Flexible Career: In ICICI Prudential the advisor have a flexible career.

OPPORTUNITY FOR THE ADVISOR

No Startup Capital Required: The advisor of ICICI have the best opportunity that they don’t require any kind of startup capital for the work that have to perform.

74

Flexible Working Environment: The second opportunity for the advisor is that they are being provided by the most flexible working environment. They are able to do work according to there convenience.

Be Your Own Boss: The next best opportunity for the advisor is that they don’t have any boss on there head they’re there own boss, they can choose there own way for doing things.

Unlimited earning potential: The next opportunity is that an advisor can earn unlimited this all depends upon the potential of that agent, no one is there who can stop them except till they stop themselves.

To Be Part of a World-Class Team: Last but not the least opportunity for the advisor is that they get a chance to become a part of world class team that is ICICI.

Characteristics of a good insurance

sales person

He should be speedy, needy and Greedy

75

He should be presentable.

He should have good Communication Skills.

He should be ready to serve with a smiling face.

EXTENSIVE TRAINING TO MAKE YOU A PROFESSIONAL ADVISOR

76

State- of-The-Art Training On:

Selling skills Product knowledge

Relationship

Training Delivery through Several Convenient Options:

Face to face Online

Self learning

EXTENSIVE PRODUCT PORTFOLIO

Extensive product range that provides financial solutions to coverall basic needs:

Pre-mature death Living too long

Living death

Children’s future

Wealth creation

77

YEAR 1 YEAR 2

YEAR 3

No. of policies sold 50 75 100

Average Premium Rs.

16,,000 16,000 16,000

Total Premium earned Rs.

8,00,000 12,00,000

16,00,000

Average Commission

Including bonuses

Estimate @ 22.5%

1,80,000 2,70,000

3,60,000

Earnings from new business Rs.

1,80,000 2,70,000

3,60,000

Commission on renewal

Premium @ 6%

48,000 72,000

For Year 2,3 & 3% after

48,000

Earnings From renewal

Business Rs.

48,000 1,20,000

Total earnings Rs. 1,80,000 3,18,000

4,80,000

78

PAYMENTS & BENEFITS- COMMISSION STRUCTURE

Year 1 Year 2 Year3

No of policy sold

100 150 200

Avg.premium rs.

20000 20000 20000

Annual premium earned rs.

2000000 3000000 4000000

Avg. commission including estimate @22.5%

450000 675000 900000

Earning from new business

450000 675000 900000

Commission on renewal premium @ 6%

120000 180000

For 2,3 & 3% after

120000

Earning from 120000 300000

79

renewal business

Annual earning

450000 795000 1200000

Depending on the product mix commission can go up to 35% in the first year,7.5% in the second and third year and 5% fourth year onwards.

Recognition programs

Foreign trip and seminars Select club membership

A) President’s club

B) ICICI Prudential star club

MDRT membership

Career progression and future opportunities

At ICICI prudential career development is emphasized upon the from very day the advisor joins the system. Though individual meeting with his or her manager. The advisor can

80

discuss various issues related to business development and career enhancement.

Tiger team: ICICI prudential offer the tiger team program identify high potential advisor. These advisors are placed on a fast track career path and recognized as tiger trainers.

Pinnacle program: this program helps advisors build a full time career as a unit manager in the unit, offering great potential for managing a team advisor and personal development.

Hand picked advisor

A fast track career path

Continue doing your business

Criteria:

Age 25-40 years

At least one year in system

Case count 2 per month

Part time career as a trainer

1. Pinnacle programmed

A full time career as a unit manager Growth within ICICI prudential

Great earning potential

Personal development

Performance criteria

81

Age 25-45

At least one year in system

Avg. two case counts per month.

2) Fast Track Pinnacle Programmed

A full time career as a unit manager Growth within ICICI Prudential

Great earning potential

Performance criteria

Age 25-45 years

At least 6 months in system

30 insurance within 6 months

Finding and data analysis

SAMPLE SIZE

82

SAMPLE SIZE

Respondent Category

No. of person

SERVICEMAN 40

BUSINESSMAN 50

SHOP-KEEPER 25

HOUSE-WIFE 20

OTHER 15

TOTAL 150

NO.OF PERSONS

Respondent category

SERVICEMAN

BUSINESSMAN

SHOP-KEEPER

HOUSE-WIFE

OTHER

TOTAL

83

Q1. Are you interested in Investing in insurance sector?

OPENION NO OF PEOPLE TOTAL %

YES 60 37

NO 95 63

NO OF INTERESTED AND UNINTERESTED PEOPLE

37%

63%

YES

NO

84

Q2. Which company’s policy you are having?

SAMPLE SIZE-150

COMPANIES PEOPLE %

LIC 92 60

ICICI 12 4

HDFC 10 2

OTHER 16 6

NON POLICYHOLDER

20 28

85

POLICY HOLDER OF DIFFERENT CO.

60%6%

4%2%

28% LIC

ICICI

HDFC

OTHER

NON POLICYHOLDER

Q3. Are you satisfied with your Investment?

SAMPLE SIZE-150

CATEGORIES

NO. OF PEOPLE

%

SATISFIED 100 67

UNSATISFIED

50 33

86

SATISFACTION LEVEL OF POLICYHOLDER

0

20

40

60

80

100

120

SATISFIED UNSATISFIED

NO

OF

PE

OP

LE

Series1

Q4.Are you aware about rules & regulation of I.R.D.A?

SAMPLE SIZE-150

OPINION NO. OF PEOPLE NO.OF PEOPLE IN %

YES 45 30

NO 105 70

87

AWARENESS ABOUT IRDA

38%

62%

YES

NO

Q5. Do you know about ICICI Prudential?

SAMPLE SIZE-150

OPINION NO. OF PEOPLE

YES 112

NO 38

88

KNOWLEDGE ABOUT ICICI PRUDENTIAL

75%

25%

YES

NO

Q6 would you like to be associated with ICICI prudential?

SAMPLE SIZE-150

OPINION NO.OF PEOPLE NO. OF PEOPLE IN %

89

YES 20 13

NO 130 87

NO OF INTERESTED PEOPLE IN ICICI PRUDENTIAL

61%

39%NO.OF PEOPLE

NO. OF PEOPLE IN %

FINDING’S

1. People mainly prefer bank for saving, then Post-Office and then insurance and after insurance they prefer P.P.F. and other. The main reason behind the bank preference is switching facility.

90

2. Mainly people prefer low growth safe return as compare to high growth some risky return.

3. People mainly purchase life insurance policy for life protection. They give 2nd preference to saving then investment and lastly tax-saving.

4. Approximately 20% people do not know what is insurance.

5. In my survey I find that only 30% people know about the I.R.D.A. remaining do not know what I.R.D.A. is

6. I also find that people mainly prefer L.I.C. as compare to private insurance company.

7. In my survey, I also find that only 67% people are satisfied with current policy.

8. I also find that only 74% people know about the ICICI

Prudential Life Insurance.

91

RESEARCH

METHODOLOG

Y

Research Methodology

92

Research methodology is a way to systematically solve the

research problem. It may be understood as a science of

studying how research is done scientifically. In it we study

the various steps, the research process that is generally

adopted to study the research problem and basic logics

behind them. The basic steps in this research are shown in

the chart below

The Research Process

The research consisted of two stages. In the first stage, a

survey was conducted to collect the data about the people.

The second stage involved analysis of the data collected in

the first stage.

93

Define the research problem and its objectives

Review concepts and theories

Collection of data survey

Research design including sample design

Analysis of data

Interpretation and report writing

Data Collection

`Data has been collected both from primary as well as

secondary sources as described below.

Sample size

The sample size for the survey was 186. It consisted of 52

Businessmen, 54 Professionals, 44 HNI and 35 Students. In

addition, data about ICICI Prudential’s services was

collected through discussions with the ICICI employees.

Primary sources

The primary source of data was Questionnaire filled by

people at different places of Hisar, Hansi and Some

Villages. After the collection of data it was arranged

and the people who were found suitable and interested

were interviewed which consisted of 53 people.

Field work

Since the task was to recruit some people for the company.

so the first thing was to look for the people in the field and

various offices.Various CA,Lawyers and other professionals

were interviewed for the recruitment purpose.

94

Secondary sources

The secondary sources of data were the various websites

and insurance manuals. This mainly provided information

about the insurance sector and the company’s profile. These

helped in gaining knowledge about the industry. These

sources are listed in References.

Research design

The methodology consisted of Descriptive research. The

problem was solved by recruiting people into the system.

The information was collected through

Questionnaire is as follows-

General Information

Time that can be devoted for this profession

To know the awareness about ICICI PRUDENTIAL.

To know about their interest in becoming advisors.

To fix an interview if interested.

95

FINDINGS

&

96

DATA

ANALYSIS

AGE COMPOSITION: In this market survey most of the

people are between the age group of 26-55yrs which

indicates that this report has most of the emphasis (84%) on

those people who are well established in their related field

i.e. business, profession, job, etc..

AGE COMPOSITION NO. OF PEOPLELESS THAN 25YRS 626YRS TO 35YRS 2536YRS TO 45YRS 4046YRS TO 55YRS 19MORE THAN 55YRS 10TOTAL 100

97

6

25

40

19

10

0

5

10

15

20

25

30

35

40

NO

. OF

PE

OP

LE

LESS THAN25YRS

26YRS TO35YRS

36YRS TO45YRS

46YRS TO55YRS

MORE THAN55YRS

AGE GROUPS

AGE COMPOSITION

1) Do you have any side business

Along with your occupation?

Yes 28

No 158

98

The above graph shows that there is good number of

people can be looking for some kind of extra business.

2) Would you be interested in earning Rs.

8000-10000 Per Month through a side

business?

Yes 112

No 74

99

Above graph shows that more than half of people are

willing to earn some money in case they are provided

with some work.

3) How much time can you devote to

this?

0-1 hour 1-2 hour 2-3 hour

more than 3

100

40 20 14

8

Above graph indicates that a good number of people

are ready to spend at least an hour from their

schedule.

101

4) Have you heard of ICICI

Prudential?

If yes, through which source?Newspaper 60

Television 32

Business magazine 46

Friends/Relatives 24

Others 0

It shows that a good number of people have the

information about ICICI Prudential.

102

SWOT ANALYSIS

ICICI Prudential is one of the most powerful, world class

Life Insurance Co., gaining appreciation for their strong

work ethics, excellent performance, professionalism and

team work which led them to progress in today’s

challenging environment. Though with its excellence

performance and every efforts has been made to present

the most authentic and truly representative findings, but

some uncontrollable factors do affect the performance and

thus bring about some deviations and hurdles in progress.

So, with its strengths and good quality, the company is

having some weaknesses, and threats and opportunities. Its

SWOT analysis is as below:

Strengths

ICICI Prudential is the largest private player in the

insurance industry in India.

Excellent services.

Customization of Products as per customer’s needs.

Brand Image.

Business Experience.

Strong Financial Base.

103

Innovative products, Technology, organization culture

and climate.

The company has a large network of branches which

is helpful to customer for the payment.

Weaknesses

Lot of competitors are in the market offer same

product by the title difference in the premium and

offerings.

Target only higher income group whereas other

companies are trying to catch middle-lower level

people.

Higher premiums as compared to the other companies

Clients face problems to get insured due to large

number of formalities.

High targets for financial advisors and for the sales

department.

Opportunities

Huge market is literally untapped. Out of estimated

320 million insurable markets only 20% of the

population is insured.

104

In a conservative society of India where people are

more inclined towards risk free investments such as

Bank FD’s and savings rather than equity and high risk

investments insurance offers the best of both worlds –

The security with high returns. So there exists high

potential for insurance company like ICICI prulife

In the pension field where people want good life after

their retirement.

Indian people are more emotional towards their

children that’s why children plans are selling like hot

cakes.

Health insurance and pension Schemes, an estimated

market potential of approximately $15 billion.

Threats

Weak perception of private players in the minds of

Indian people due to frequent financial scams

Large number of insurance players

Existing wrong business practices of companies like –

LIC First premium is paid by their agents where – as

IRDA suggests that even forms to be filled by the

clients themselves

Players like Allianz Bajaj and Birla sun life with low

premium for the similar plans

105

Entry of many other private companies with equally

strong experience and financial strength of foreign

partners making the competition difficult and

saturating the urban markets.

LIC has woken up from sleep and is following

competitive strategies. Its huge surplus in Life Fund

gives a capability to lodge Price war.

Current Government policies do not encourage Gross

Domestic Savings. If the Tax Liability of the service

class rises, the customer will have little money to

invest.

For the Insurance sector Government set the authority

that is IRDA (Insurance Regulatory and Development

Authority) which is undertaken to track record of all

the companies and change rules day by day more rigid

which is very difficult for the companies.

----------

Recommendations

There should Be a weekend batch of training for the people who can

not take there full six days from there busy schedule.

There should be some fixed salary with some fixed targets as other

companies are doing.

106

Advertising should be given in the newspapers so that more number

of people can come for the interview.

Various MBA institutes should be targeted to get people with good

marketing as well as interpersonal skills.

Presentation about advisor as a career opportunity should be given in

the various seminars and get-together.

The Indian economy has demonstrated its resilience with

the GDP growing by 4.3% in the last year, which compares

quite favorably with most countries round the world. This

was despite poor monsoons, global economic slowdown and

heightened geo-political uncertainty due to Iraq war, high

oil prices and border tensions. Inflation which arouse to

round about 6.5%, has come of o a most stable 5%. This

bodes well for the Indian economy which is expected to post

GDP growth in excess of 5.5% in financial year 2004.

Growth is likely to be boosted by large infrastructural

projects and high retail credit along with positive trends in

various macro variable trends like appreciating Rupee,

strong forex reserves, benign inflation and stable interest

rates.

The equity outlook is positive with the Indian corporate

sector looking fundamentally strong on account of

operational efficiency improvements achieved in recent

years. Companies are expected to build on recent gains as

107

economic recovery picks up steam especially with a good

start to monsoons. However, it would also be prudent to

recognize the inherent risks if there is a second consecutive

monsoons failure in an agriculture dependant economy like

India. Also, with elections looming large we could see some

slackening in the pace of reforms which is another

downside risk.

The fixed income outlook is stable. A lot income outlook is

stable. A lot depends on the inflation and monsoon trends

going forward. While economic recovery and credit

overtake could gap the upside, liquidity in the system is

likely to protect the downside resulting in fairly flat market

----------

108

REFERENCES

1.www.iciciprulife.com

2.www.financialexpress.com

3.www.insuranceguide.com

109

Questionnaire

1. General Information

a. Name: ---------------------------------------

b. Address: -------------------------------------

--------------------------------------

c. Telephone: -----------------------------------

d. Age: -------------------------------------------

e. Occupation/Business: -------------------------------------

2. Do you have any side business along with your occupation?

Yes / No

3. Are you interested in earning handsome additional income?

Yes / No

4. If yes, how much time can you devote to this on daily basis?

110

a. 0-1 hours

b. 1-2 hours

c. 2-3 hours

d. More than 3 hours a day

5. Whether you know that insurance advisors are among the highest paid people in India?

Yes / No

6. Want to have a steady source of income at present and in future year

after year?

Yes / No

7. Zero balance A/c in ICICI bank, free foreign trips by the company, membership of international associates like president club, star club etc., and contests to win gifts and gold.

Want to enjoy all these facilities and many more?

Yes / No

8. Have you heard about the ICICI Prudential Life Ins. Co. Ltd.?

If Yes, through:

i. Newspaperii. Television

iii. Business Magazine

iv. Friends/Relatives

v. Other Sources

111

9. Want to know more about advisor ship as career or business in ICICI Prudential Life Insurance CO. Ltd.?

Yes / No

If Yes:

Tentative date of appointment-------------------------------

Time --------------------------------------------------------------

Your contact no. ------------------------------------------------

10. Any Suggestion or queries:

-------------------------------------------------------------------

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Student undertaking

“The project is submitted to Haryana School of Business Hisar, as a Summer

Training Project for Master of Business Administration 2006-2008”

Project guides:

Company-: Mr. Amit Walia

Faculty-: Dr. Vinod Kumar Bishnoi

112

By-:

Lokesh Kumar

113