ON
STUDY OF MUTUAL FUND OF AXIS BANK
ACKNOWLEDGEMENT
The present work is an effort to throw some light on Axis Mutual Fund. The work
would not have been possible to come to the present shape without the able guidance,
supervision and help to me by number of people.
With deep sense of gratitude I acknowledge the encouragement and guidance received
by my organizational guide Mr. .................) and other staff members.
I convey my heartful affection to all those people who helped and supported me during
the course, for completion of my Project Report.
...............................
Enrollment No.:
EXECUTIVE SUMMARY
This marketing strategic plan has been written keeping in mind the Indian operations of
banking system. It aims first, at analyzing the banking system in India and finding a
place in it for AXIS BANK. It then sets out to describe the target audience for the
product range and finally suggests a host of marketing strategies and activities that will
help AXIS to achieve its target of becoming the #1 BANKING SYSTEM in India. The
plan begins with a brief overview of the product category being dealt. It also dwells
briefly on the history of the company and its current position and activities. The project
moves on to the crux of the matter the marketing plan to be followed by AXIS BANK
in India. Firstly, the objectives behind this plan and the core strategy are stated.
Customers to be eventually targeted are described and compared with competitors
customer targets. After starting the objectives and reasoning behind them, the actual
marketing programs are described in detail. This includes aspects such as pricing,
advertising, promotion, sales, channels, and the company website.
Suggestions are made on each and every one of these aspects; improvements and
innovations are recommended. The plan then goes on to the customer analysis section.
The customer base is identified and various segments are pointed out. Various criteria
and factors have been taken into consideration while segmenting the market. We have
also tried to ascertain why customers buy these products, how they choose, and what
factors matter most when making their decisions. The last few pages of this marketing
plan deal with the various ways in which the plan, once implemented, can be monitored
and controlled.
TABLE OF CONTENT
TOPICS
PAGE NO.
1-6
7-28
29-36
37-41
42-54
55-58
59-60
ANNEXURES
BIBLIOGRAPHY
CHAPTER- 1
INTRODUCTION
As on March 31, 2008 there are a total number of 1.6 crores investors accounts (it
is likely that there may be more than one folio of an investor which might have been
counted more than once and actual number of investors would be less) holding units of
Rs. 79,601 crores. Out of this total number of investors accounts, 1.56 crores are
individual investors accounts, accounting for 97.42% of the total number of investors
7
accounts and contribute Rs.32,691 crores which is 41.07% of the total net assets. The
total number of investors account is lower in comparison with the total number of
investors accounts as on March 31, 2007 as the above data includes information only of
AXIS Mutual Fund (which is registered with SEBI on January 14, 2008). The data of the
Specified Undertaking of AXIS (not registered with SEBI) is not available with us.
ii)
Corporates and institutions who form only 2.04% of the total number of investors
accounts in the mutual funds industry, contribute a sizeable amount of Rs.45,470 crores
which is 57.12% of the total net assets in the mutual funds industry.
iii)
The NRIs/OCBs and FIIs constitute a very small percentage of investors accounts
Out of a total of 1.6 crores investors accounts in the mutual funds industry, (it is
likely that there may be more than one folio of an investor which might have been
counted more than once and therefore actual number of investors may be less) 42.93 lakh
investors accounts i.e 27% of the total investors accounts are in private sector mutual
funds whereas the 1.17 crores investors accounts ie.73% are with the public sector mutual
funds which includes AXIS Mutual Fund. However, the private sector mutual funds
manage 71.2% of the net assets whereas the public sector mutual funds own only 28.8%
of the assets
Risk factors
Mutual Funds and securities investments are subject to market risks and there can be no
assurance or guarantee that the Schemes objectives will be achieved. As with any
investment in securities, the Net Asset Value of Units issued under the Schemes may go
up or down depending on the various factors and forces affecting the capital market. Past
performance of the Sponsors/ AMC/ Mutual Fund/ Schemes and its affiliates do not
indicate the future performance of the Schemes of the Mutual Fund. The Sponsors are not
8
responsible or liable for any loss or shortfall resulting from the operations of the Schemes
beyond their contribution of Rs.10,000/- each made by them towards setting of the
Mutual Fund The Names of the Schemes do not in any manner indicate either the quality
of the Schemes or their future prospects and returns. Investors in the Schemes are not
being offered any guarantee / assured returns. Please read the Offer Documents carefully
before investing.
Franklin Templeton Mutual Fund has proposed a dividend for Franklin India
Taxshield. The record date is March 18.
HDFC Mutual proposes to declare dividend on HDFC Prudence and HDFC Balanced
Fund. The record date for the dividend will be March 18.
Franklin Templeton Mutual has mopped up Rs 1,950 crores from the initial offering
of Franklin Flexicap. This is the largest amount mobilized by any open-end fund
IPO. The fund will be open for an ongoing basis from March 7.
64, it severely criticized the way the scheme worked. A fundamental flaw was that Unit64 lived beyond its means, rewarding unit holders with dividends beyond its capabilities
and propping up the price of Units well beyond their real worth.
Use of unclaimed funds lying with mutual funds for investor education;
Creation of level playing field between mutual funds and FIIs in the context of
international investing
He said that the Indian markets are very safe, despite the growing volatility that has been
seen in the recent period.
AXIS chairman, P S Subramanian said that the quality of investor services in the industry
has grown over the years. He said there is a scope to increase the penetration and
volumes in the mutual fund industry by reaching out to more investors. He noted that
technology has significantly altered the manner in which mutual funds conduct their
business.
In the context of globalization of capital markets, he pointed out that risk management
has become critical for mutual funds. He also indicated that corporations will have to
adopt best practices in information disclosure and dissemination.
MARKET PRESENCE
Money market development of mutual funds
Resource mobilization by Mutual Funds improved during 1997-98. The number of offer
documents of mutual funds filed with SEBI increased substantially from 32 in 1996-97 to
60 in 1997-98. The amount mobilized through new schemes and subscriptions to open
ended schemes including Unit 64 of AXIS also increased. Indeed the gross mobilization
of resources by all mutual fund schemes during the year was around Rs. 13,000 crores
which was for the first time higher than the resources mobilized by the primary market.
Even net of redemptions in open ended schemes the resources mobilized by the mutual
funds during the year was higher than the resources raised through primary market. These
improvements were partly in response to the regulatory changes brought about by SEBI
following the publication of the Mutual Funds 2000 Report and the notification of new
regulations. The emphasis of these new regulations is on empowerment of investors,
greater compliance of regulations by mutual funds, obligations of trustees as frontline
regulators, improved disclosure standards in offer documents through the introduction of
12
13
CHAPTER-2
COMPANY PROFILE
14
COMPANY PROFILE
Replying to a related query he said though each of these institutions had their own mutual
fund businesses, it would not clash in any manner with that of AXIS mutual Fund since
the agreement among them would prevent them from doing so.
In the wake of over 33 per cent growth in the Indian Mutual Fund industry since April
this year, Mr Sinha said it had enabled the AXIS Mutual Fund to increase its Asset base
by over Rs 5,500 crores during this period from Rs 20,000 crores achieved till
March. "We are confident to maintain a similar growth path in the coming years too."
About the huge potential and the actual position, Mr Sinha claimed that AXIS Mutual
Fund had already been enjoying about 67 per cent domestic market share of the country's
around one crores investors in mutual fund products.
AXIS Asset Management Company became a private company last month with the four
sponsors, Life Insurance Corporation of India, State Bank of India, Punjab National Bank
and Bank of Baroda paying back the government its equity worth Rs 1,236.95 crores in
the company. Each sponsor now owns a 25 per cent stake in the company and under the
terms of the new agreement, the owners will not be allowed to change their shareholding
pattern.
We are also keen to increase our exposure in the overseas market through the offshore
funds, said Sinha.
AXIS Mutual Fund is also exploring investment opportunities in emerging sectors like
the knowledge process outsourcing, textiles and biotech through the private equity and
venture capital arm, AXIS Venture Funds, said D. S. R. Murthy, executive director,
AXIS Asset Management Company.
17
CORE VALUES
Customer satisfaction through providing quality service
effectively and efficiently
Smile, it enhances your face valueis a service quality stressed
on periodic customer audits
Maximisation of stakeholder value
Success through team work,integrity and people
18
Shri M. M. Agrawal
Director
Director
Director
Director
Director
Director
Shri K. N. Prithviraj
Director
19
ORGANISATIONAL STRUCTURE
20
21
22
Advantages: In India these funds become even more attractive because of the tax
advantages, like indexation benefits , long term capital gains tax , tax free dividends and
much more.
1.
Liquidity
In open-ended schemes, you can get your money back promptly at net asset value
related prices from the Mutual Fund itself. With close-ended schemes, you can sell your
units on a stock exchange at the prevailing market price or avail of the facility of direct
repurchase at NAV related prices which some close-ended and interval schemes offer you
periodically.
2.
Transparency
You get regular information on the value of your investment in addition to disclosure on
the specific investments made by your scheme, the proportion invested in each class of
assets and the fund manager's investment strategy and outlook.
23
3.
Flexibility
Through features such as regular investment plans, regular withdrawal plans and dividend
reinvestment plans, you can systematically invest or withdraw funds according to your
needs and convenience.
4.
Choice of Schemes
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
5.
Well Regulated
All Mutual Funds are registered with SEBI and they function within the provisions of
strict regulations designed to protect the interests of investors. The operations of Mutual
Funds are regularly monitored by SEBI.
In the following chapters we propose to discuss all relevant information about Mutual
Funds in India, the regulatory and legal structure governing them that a common investor
ought to know. The literature is mostly drawn from the website of SEB, but suitably
tabulated to provide ready information
6.
Professional Management
The investor avails of the services of experienced and skilled professionals who are
backed by a dedicated investment research team which analyses the performance and
prospects of companies and selects suitable investments to achieve the objectives of the
scheme.
7.
Diversification
24
the same time and in the same proportion. You achieve this diversification through a
Mutual Fund with far less money than you can do on your own.
8.
Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such
as bad deliveries, delayed payments and unnecessary follow up with brokers and
companies. Mutual Funds save your time and make investing easy and convenient.
9.
Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher return
as they invest in a diversified basket of selected securities.
10. Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly investing
in the capital markets because the benefits of scale in brokerage, custodial and other fees
translate into lower costs for investors.
25
Banks
Amount(Rs Crs)
Percentage
AXIS
2,17,000.2
67.00
Public Sector
31,334.34
9.68
Private Sector
75,503.67
23.32
Total
3,23,838.30
100.00
During the year 2007-2008, the share of AXIS in the total assets of the mutual funds
industry has declined to 67% from 77.9% in 2007. Net assets of other public sector
mutual funds have also shown a decline from 12.09% in 2007-2008 to 9.68% However,
net assets of private sector mutual funds have increased from 9.97% in 2007-08 to
23.32% .
There are 34 private Mutual Funds in the fray and they have seized about 25% of the
market share in the brief period of 7 years, mobilizing above Rs.50000 Crores from the
public
around 300 million. A typical Indian middle class family can have liquid savings ranging
from Rs.2 to Rs.10 Lacs today. Investments in Banks are liquid and safe, but with the
falling rate of interest offered by Banks on Deposits, it is no longer attractive. At best a
part can be saved in bank deposits, but what is the other sources of investment for the
common man? Mutual Fund is the ready answer. Viewed in this sense globally India is
one of the best markets for Mutual Fund Business, so also for Insurance business. This is
the reason that foreign companies compete with one another in setting up insurance and
mutual fund business units in India. The sheer magnitude of the population of educated
white collar employees provides unlimited scope for development of Mutual Fund
Business in India.
The alternative to mutual fund is direct investment by the investor in equities and bonds
or corporate deposits. All investments whether in shares, debentures or deposits involve
risk: share value may go down depending upon the performance of the company, the
industry, state of capital markets and the economy; generally, however, longer the term,
lesser the risk; companies may default in payment of interest/ principal on their
debentures/bonds/deposits; the rate of interest on an investment may fall short of the rate
of inflation reducing the purchasing power. While risk cannot be eliminated, skillful
management can minimize risk. Mutual Funds help to reduce risk through diversification
and professional management. The experience and expertise of Mutual Fund managers in
selecting fundamentally sound securities and timing their purchases and sales, help them
to build a diversified portfolio that minimizes risk and maximizes returns.
BRIEF HISTORY
FIRST PHASE - 1964-87
Unit Trust of India (AXIS) was established on 1963 by an Act of Parliament. It was set
up by the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 AXIS was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and administrative
control in place of RBI. The first scheme launched by AXIS was Unit Scheme 1964. At
the end of 1988 AXIS had Rs.6,700 crores of assets under management.
27
28
CONCEPT
There are many entities involved and the diagram below illustrates the organisational set
up of a mutual fund:
FEATURES
Unique Features of AXIS their Impact on its Functioning [Extract from the Report of
"Corporate Positioning" Committee]
In the initial stages, AXIS had been performing a hybrid role of both a financial
institution and a mutual fund. However, over the last few years, its role as a financial
institution has significantly diminished and it has positioned itself purely as the largest
mutual fund in the country. There is also a significant trend emerging which suggests that
financial institutions will gradually wither away or merge into universal banks. In this
scenario, commercial banks and mutual funds will emerge as the primary institutions for
the mobilization of household savings. This reinforces the need for AXIS to evolve as a
pure mutual fund. At the same time, consideration has to be given to the fact that AXIS
has promoted and holds controlling interest in a number of institutions outside the pure
mutual fund industry.
29
The Association of Mutual Funds of India works with 30 registered AMCs of the country.
It has certain defined objectives which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:
This mutual fund association of India maintains high professional and ethical
It also recommends and promotes the top class business practices and code of
conduct which is followed by members and related people engaged in the activities of
mutual fund and asset management. The agencies who are by any means connected or
involved in the field of capital markets and financial services also involved in this code of
conduct of the association.
AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual
fund industry.
Association of Mutual Fund of India does represent the Government of India, the
Reserve Bank of India and other related bodies on matters relating to the Mutual Fund
Industry.
program of training and certification for all intermediaries and other engaged in the
mutual fund industry.
AMFI undertakes all India awareness program for investors in order to promote
At last but not the least association of mutual fund of India also disseminate
information on Mutual Fund Industry and undertakes studies and research either directly
or in association with other bodies.
BANK SPONSORED
INSTITUTIONS
AXIS Mutual Fund ties up with Dena Bank for distributing its MF schemes
AXIS Mutual Fund (AXIS MF) and Dena Bank today announced a strategic tie-up
for distribution of AXIS MF schemes. Under the agreement, Dena Bank will offer the
entire bouquet of AXIS MF's schemes across the bank's selected branches
September 12, 2005: AXIS Mutual Fund (AXIS MF) and Dena Bank today announced a
strategic tie-up for distribution of AXIS MF schemes. Under the agreement, Dena Bank
will offer the entire bouquet of AXIS MF's schemes across the bank's selected branches.
Presently AXIS MF (with assets under management of over Rs.25000 crores) reaches out
to its investors through its wide distribution network comprising 65 Financial Centers
(UFCs), 271 Chief Representative offices, 58 Chief Agents, over 19000 AMFI certified
Financial Advisors and through tie-ups with several Banks and Department of Post.
With today's tie-up, AXIS MF is further enhancing its distribution capabilities. AXIS MF
will now also be offering its schemes initially through 80 branches of Dena Bank
including 41 Fin Mart branches across India.
Announcing the AXIS MF's tie-up with Dena Bank, Dr R H Patil , Chairman, AXIS
AMC said, "This initiative reflects AXIS MF's strategy to rapidly expand in the retail
market and value-add its access network to complement the Mutual Fund's growth
32
strategy in the Indian mutual fund sector. With this tie-up millions of customers of Dena
Bank will get an opportunity to invest in various schemes of AXIS MF closer to their
doorstep at the branches where they do their banking transactions."
"Dena Bank has got a dominant presence in Gujarat and Maharashtra which happen to be
important retail markets for AXIS MF." he added
33
34
AXIS Bank personal loaning is about the futurethe secure and comfortable future
one would like to provide for himself and his loved ones. When a person plan for that
future, he starts with his goals, identifying the things he had like to be able to afford, what
theyll cost and when he will need the money to pay for them. The next step is creating a
strategy for accomplishing those goals. He will discover that saving and investing are
essential to AXIS Bank personal loaningand that if he wishes, he can find someone
with professional experience to help him decide how to make the most of the money he
already has. Another part of planning is writing a will or perhaps creating a trust that lets
a person create a legacy by sharing the assets he has accumulated with the people or
organizations he had want.
Some people know exactly what their Bank goals are. And some do not. Or maybe
they are spending all their energy managing their current Bank situation. If thats the
case, it may take a special effort to concentrate on what one thinks is important for the
future. But one will find its worth the time to consider the next 5, 20 and 40 years of his
life to anticipate where he had like to be when that time arrives. There are some goals that
most people share: staying out of debt, owning a home, and having a secure retirement.
Others may be more specific to paying for childrens college tuition or starting ones own
small business. There are no right answers about what the goals should bewith the
possible exception that most people have to be concerned about affording a Bankly
secure retirement. Thats why each persons plan is unique.
In industrialized countries, the journey through life tend to go through stages. The
stage we find our self in will have an impact on our AXIS Bank personal loaning.
Modigliani and Brumberg (1954) devised a model to explain these stages.
35
Processing fees of 2%
Proof of turnover, proof of continuity current job,ID proof, residence proof, office
proof .
HDFC Bank
EMI as low as Rs. 36 per Rs. 1000 per month for 36 months &
Term- 2 years, the total amount- 100000 (11,75%), 500000 (11.75%) & 1000000
(19%).
V Every type of loan is provided without any guranteer.
36
State Bank of India (SBI) and its subsidiary banks Rs.0.75 crores
Scheduled banks (other than SBI and its subsidiary banks) and notified financial
institutions Rs.1.00 crores
The initial capital forms part of US-64 and the subscribers hold units in that Scheme. In
1975, the AXIS Act was amended and by virtue of the amendment, the Industrial
Development Bank of India (IDBI) took over the rights and responsibilities of RBI under
the Act and the share of the initial capital held by RBI was transferred to and vested in
IDBI.
AXIS is the largest player in the mutual fund industry with total investible funds of
domestic schemes (at Market Value) as at 30th June, 2008 of Rs.2,17,000.2crores
constituting about 67% of the total investible funds of the industry. US 64 with a total
unit capital as at 30th June 2007 of Rs.60,786 crores had a substantial share of these
investible funds.
STRENGTHS
37
Its nation-wide well entrenched distribution network and consequently its wide
reach and capacity to mobilize large resources;
Its brand image arising out of a public Its large size with consequential economies
of scale;
Its nation-wide well entrenched distribution network and consequently its wide
reach and capacity to mobilize large resources;
Its brand image arising out of a public perception that the safety of funds is
assured by its pseudo Government character, which may not be entirely
unjustified.
The fact that it does not have an AMC to whom management fees would have to
be paid which results in higher returns available to unit holders.
WEAKNESSES
OPPORTUNITIES
Axis can get success or high profits by fulfilling the unfulfilled needs of the
customers.
38
As the education level in the country is improving there are a lots of investors
who are investing in the mutual funds.
THREATS
With the increase in the no. of investors there is also increase in the no. of the new
competitors in the market.
The mutual fund is totally a technology based business which is quite complex.
CHAPTER-3
CONCEPTUAL
DISCUSSION
39
CONCEPTUAL DISCUSSION
40
performance. They have categorically reinforced the fact that mutual funds remain the
most suitable avenue for retail investors to build wealth.
Yet the mutual funds industry remains driven by the kind of marketing initiatives where
the interest of the brokers is paramount.
There are no debates on what could be done to save investors from the clutches of
the brokers or on product development.
These may be a consequence of the small size of the industry as of now. As its size
improves, investor interests may regain their rightful place. There is, however, reason to
believe that the industry structure does not provide scope for developments. The
mutual fund industry may be forced to focus on doing simple things, mainly managing
index funds better. Innovations that matter may be driven into the fold of private equity
unless the incentive structure is re-worked.
Inefficient products: A sore point about mutual funds is that inefficient products are just
left to languish. Substantial sums invested in sector funds, index funds, bond funds,
balanced funds and monthly income plans are under-performing. We are, however, yet to
see the kind of restructuring necessary to make them more suitable to an investor's
portfolio.
For instance, indices such as BSE-100 and BSE-200 have consistently outperformed the
Sensex and the Nifty by about four percentage points per annum over the past three years.
There is, however, no attempt to introduce index funds at least on BSE-100.
42
While SEBI has powers of direct surveillance of the stock exchanges, members of stock
exchanges and other market intermediaries registered with it, SEBI has no powers over
listed companies. Further, the present penalty levels in many cases are not high enough to
effectively deter market players from regulatory violations. In particular, the amount of
monetary penalty for non-compliance with respect to disclosure, information
requirements, insider trading and market manipulation is very inadequate. To cite an
example, a maximum monetary penalty of only Rs.1, 000/- can be imposed in case of
failure to comply with the provisions of listing agreement. Similarly, under the SEBI Act
the penalty for insider trading and non-disclosure of acquisition of shares and takeovers is
only Rs.5 lakh. The Group believes that there is a need to allow SEBI enhanced authority
Cooperation in Regulation
Various segments of the domestic financial market are getting increasingly integrated.
There have also been progressive linkages between the domestic and international capital
markets. As a result, the regulatory interventions or their absence in one market tend to
have repercussions in other markets that are more serious and more widespread than in
the past. Further, with the emergence of more and more financial supermarkets and
growing complexity of financial transactions, there are increasing instances of the same
market intermediary coming under the purview of multiple regulatory bodies. These
factors have raised the potential for regulatory gaps as well as overlaps, thereby
underlining the need for greater cooperation among various regulators.
Currently, coordination among domestic regulators is occurring through the High Level
Group on Capital Markets (HLGCM) comprising the RBI, SEBI, the IRDA and Finance
Ministry. The HLGCM has set up two Standing Committees: one for regulatory
coordination and the other for coordination in matters relating to the development of debt
markets. The Committee meets periodically to exchange information and views. Besides,
to address specific issues such as DvP system or asset securitization, the RBI and SEBI
have been coordinating through the institution of working groups. The Group observes
that there is scope to further strengthen the coordination efforts. There may be merit in
formalizing the HLGCM by giving it a legal status. Besides, the HLGCM needs to meet
more frequently and its functioning needs to be made more transparent. Also, a system
43
needs to be devised to allow designated functionaries (not necessarily only at the top
level) to share specified market information on a routine and automatic basis.
As regards coordination with regulators in other countries, the RBI has put in place a
system of exchange of need-based information in respect of international operations.
However, the powers of SEBI to assist foreign regulators or to enter into MOUs or other
cooperation arrangements are not explicitly provided by legislation, although SEBI has
signed a MoU with the Securities Exchange Commission of the USA. Hence, the Group
is of view that necessary legislative changes need to be made to enhance SEBI's scope in
this regard.
Self-Regulation
The SEBI Act provides for promotion and regulation of SROs (i.e., stock exchanges).
The stock exchanges are empowered to make rules and regulations for their members and
for regulating the conduct of respective members. However, self-regulation is not always
effective, because the current ownership and governance structures of many stock
exchanges allow scope for conflict of interest. These exchanges are owned and managed
by members who enjoy exclusive trading rights. In the broker-owned exchanges, brokers
elect their representatives to regulate activities of the exchange, including those of the
brokers themselves. This raises fairness issues, because the members of stock exchange
governing boards have access to valuable information about market participants.
Elimination of such conflict of interest through demutualization, which implies
separation of ownership of exchange from the right to trade on it, can promote fairness
and reinforce investor protection.
Further, the slow evolution of the Association of Mutual Funds of India (AMFI) as a SRO
has meant continuation of substantial regulatory burden on SEBI. In this regard, the
Group suggests that SEBI assist the AMFI to develop into a full-fledged SRO. Similarly,
in money and government securities markets, Fixed Income Money Market and
Derivatives Association of India (FIMMDA) and Primary Dealers Association of India
(PDAI) are operating as industry level associations, who are gradually taking on the role
of SROs. There is as yet no regulatory oversight of the RBI over these emerging SROs.
44
LEGAL ISSUES
Institution-specific regulations
The legal framework constrains the RBI from exercising uniform powers vis-a-vis
different groups of players, even though the activity regulated is the same because of a
peculiar legal arrangement. The amended Securities Contract Regulation Act (SCRA) has
conferred on the RBI the responsibility of regulation of Government securities and
money markets, but not the necessary enforcement powers to regulate these markets. To
regulate these markets, the RBI therefore resorts to its regulatory authority over the major
participants in these markets such as banks, financial institutions and primary dealers
through separate institution-specific legislation. With respect to banks, the RBI has
statutory powers of inspection, investigation, surveillance and enforcement under
Banking Regulation Act, 1949. As regards financial institutions, the regulatory powers
are available to the RBI under the RBI Act 1934. The RBI's regulatory powers over FIs
are not as comprehensive as over banks. With regard to Primary Dealers, the RBI
exercises regulatory powers on the basis of guidelines issued by RBI and MOUs signed
between PDs and RBI on a contractual basis. This underlines the need for (a) the same
legislation to include both regulatory responsibilities and the authority to carry them out
and (b) the focus to shift from institution-specific regulation to market-specific
regulation.
MARKET ISSUES
It is important to recognize the trade-off between over-regulation and high cost of
compliance. Over-regulation may minimize market friction, but can potentially kill a
market. To dilute this tradeoff, it is important to modernize the microstructure.
(Microstructure relates to the manner in which a market is organized and the trading and
post-trading technology the market adopts.) As regulations become more and more
45
complex, certain regulatory objectives can be more easily attained through changes in
microstructure rather than further addition to regulatory law.
Market Infrastructure
Screen-Based Trading System
As enunciated in Chapter II, the equities market has witnessed a quantum improvement in
trading technology during the 1990s as it moved away from the open-outcry system of
trading to a computer screen-based trading. The new technology has not only increased
transparency in trading, but also facilitated the integration of different trading centers into
a single trading platform. Permitting of internet trading has enabled investors across the
globe to route orders through the internet for execution on the Indian stock exchanges. In
contrast to the equities market, the government securities market and the market for
money market instruments are largely negotiated markets. Although the NSE established
a wholesale debt market segment for exchange trading, members generally use this
segment only for reporting trades undertaken by them in the negotiated market, rather
than trading on the exchange.
Depositories and dematerialization
To ensure transferability of securities with speed, accuracy and security, the Depositories
Act was passed in 1996, which provided for the establishment of securities depositories
and allowed securities to be dematerialized. Following the legislation, two depositories
(NSDL and CDSL) have so far been established. Further, the compulsory
dematerialization of shares for trading purpose has been introduced in a phased manner
with the aim of synchronizing the settlement of trade and transfer of securities
irrespective of geographical locations, and eliminating the ills associated with paperbased securities system such as delay in transfer, bad delivery, theft and forgery. Although
the process of compulsory dematerialization is nearing completion, its full benefits have
not been reaped because of slow progress in introduction of rolling settlement.
With the appropriate infrastructure in place, there is now scope for taking further
advantage of depositories to promote retailing of government securities. The RBI has
taken a step in the right direction by allowing NSDL and CDSL to have a second SGL
46
account for depository participants who in turn can hold in custody government securities
on behalf of the final investors. This will facilitate holding of government securities in
demat form.
47
As regards transparency in trading, the debt market is lagging behind the equity market.
The cash market in debt securities throughout the world prefers to operate through
negotiated deals either through telephone or an electronic dealing system like Bloomberg.
This is because unlike the equity market, the bond market participants are generally
wholesale institutional investors who put in large deals at a time, which may not always
be possible through the screen based order driven system. It is only in the futures market
that the principles of anonymity, price time priority, nationwide market and settlement
guarantee are known to work. As stated earlier, wholesale institutional investors have yet
to show adequate inclination to use the anonymous order matching system for executing
their debt securities transactions.
MUTUAL FUNDS
SEBI is the principal regulator of the mutual fund industry. Mutual funds in India are
constituted in the form of trusts. The funds sponsor executes the trust deed, which
outlines the liabilities and obligations of the trustees in relation to the unitholders. The
day-to-day operations of the fund are carried out by the asset management company
(AMC). The board of trustees oversees the funds activities and enters into a management
agreement with the AMC.
SEBI has put in place standards for the eligibility and the regulation of those who wish to
market or operate a collective investment scheme. Eligibility criteria have been set in
terms of net worth, track record and internal management procedure. The regulations lay
down disclosure requirements, procedures for calculating and declaring net asset values
(NAV) of mutual fund schemes, accounting standards and a code for advertisements.
Regulations are also prescribed to ensure arms-length relationship between the trustees
and the AMC. SEBI is responsible not only for registration and authorization of schemes,
but also for inspection of registered mutual funds and remedial action against any
regulatory infraction.
48
CHAPTER- 4
RESEARCH
METHODOLOGY
49
RESEARCH METHODOLOGY
4.1 OBJECTIVES
The present study has been undertaken with the following objectives: To analysis the conceptual issues pertaining to AXIS Mutual funds with their
implications for a developing country like India.
To examine the theoretical framework of AXIS Mutual fund in India to provide clues
for growth strategies of AXIS Mutual industry in India.
To study the role of AXIS Mutual in the economic development of the country, so as
to bring out the biases and inadequacy of the government policy related to the Mutual
funds in the country.
To determine the factor that effect the purchasing decision of mutual fund
To study the legal and regulatory frame work of AXIS Mutual fund in India;
To study the working of AXIS Mutual fund industry in India in terms of its practices,
procedures and constraints within which, it has been operating;.
To determine the age group which is most influenced by mutual fund
To determine the income group which is most influenced by mutual fund .
Conducting research in various parts of the city in order to get the statistical data
50
Dichotomous Question
Which has only two answers Yes or No.
Multiple choice Question
Where respondent is offered more than two choices.
Importance scale
A scale that rates the importance of some attribute.
Rating scale
A scale that rates some attribute from highly satisfied to highly unsatisfied and
very inefficient to very efficient
Sample design
Who is to be surveyed? The marketing researcher must define the target population that
will be sampled.
The sample Unit taken by me; General public of different age group, different gender and
different profession
Extent:Where the survey should be carried out?
I have covered entire residential area of Delhi city for the survey
52
In the Project sampling is done on basis of Probability sampling. Among the probability
sampling design the sampling design chosen is stratified random sampling.
Because in this survey I had stratified the sample in different age group, different gender
and different profession
4.4 METHODOLOGY
The AXIS Mutual funds seek to earn extraordinary return from their investments. For
this, generally they employ innovative methods of fund management and at the same time
they try to keep their strategies a closely guarded secret. In India, an additional point to
keep in mind is the limited number of AXIS Mutual funds in operation of AXIS Mutual
funds in operation. The research methodology for the present study has been adopted to
reflect these realties and help reach the logical conclusion in an objective and scientific
manner.
DATA COLLECTION
The present study contemplated an exploratory research. Secondary data has been used
which is collected through venture activity reports, journals, magazines, newspapers
reports prepared by research scholars, universities and internet.
Limited analytical techniques have been used due to the nature of data available
54
CHAPTER-5
DATA ANALYSIS
AND
INTERPRETATION
NO.OF RESPONDENTS
SCHEMES
25
GROWTH
INCOME
15
TAX BENEFIT
LIQUIDITY
30
25
20
15
Series
1
OF
No.
Respondents
10
Growth
Income
Tax Benefit
Liquidity
Purpose of Investment
INTERPRETATION
According to the graph, we find that maximum number of people invest their fund for
Growth purpose than their next motive is tax benefit. Investors who are invest their fund
for growth they are between 21 to 35 Age Group and maximum are in middle income
56
group. Who are invest their fund for tax benefit they belong to high income family and
maximum investors are invest their fund for regular income and liquidity.
INFLUENTIAL FACTOR
35
10
3
2
AGENT
FRIEND
NEWS PAPER
T.V.
INTERPRETATION
57
Maximum investors influenced by agent because they do not know any thing about
mutual fund and their schemes so they believe upon agents. Very few investors
influenced by their friend, news paper and television
58
Question 3:- Do you think tax benefit also influence you for purchasing
mutual fund?
NO. OF REPONDENTS
35
15
YES
NO
INTERPRETATION
According to research 35 investors influenced by tax benefit , they belong from high
class family and maximum of them are 36 to 50 age group .And rest of the investors who
does not consider tax benefit .they belong from middle class family and maximum of
them are 21 to 35 age group .
NO. OF REPONDENTS
SCHEMES
19
15
6
2
2
EQUITY
LIQUID
DEBT
INDEX
FIXED
OTHER
INTERPRETATION
In mutual fund schemes, maximum number of investors invests their money in equity
fund according to this schemes investors funds are invest in equity market for maximum
return. 15 investor are invest their money in liquid schemes , according to this schemes
they can withdraw their money at any time .Some investors are also invest their money in
debt , index , fixed and other schemes .
60
Question 5:- How many people feel ease in accessing the account?
COMPARISON BETWEEN AXIS AND ICICI BANK
AXIS BANK
SATISFACTION LEVEL OF CUSTOMERS
NO. OF PERSONS
(B) DISSATISFIED
(C) NEUTRAL
11
(D) SATISFIED
20
13
TOTAL:50
ICICI BANK
SATISFACTION LEVEL OF CUSTOMERS
NO. OF PERSONS
(B) DISSATISFIED
(C) NEUTRAL
12
(D) SATISFIED
19
11
TOTAL:50
120
100
80
AXIS BANK
60
ICICI BANK
40
20
0
1
INTERPRETATION
If we analyze the aggregate satisfaction level , satisfaction level of AXIS BANK in ease
in accessing the account is 1.5% more than ICICI BANK
62
NO. OF PERSONS
3
9
12
16
10
TOTAL:50
ICICI BANK
SATISFACTION LEVEL OF CUSTOMERS
(A) VERY DISSATISFIED
(B) DISSATISFIED
(C) NEUTRAL
(D) SATISFIED
(E) VERY SATISFIED
NO. OF PERSONS
4
10
11
15
10
TOTAL:50
100
90
80
70
60
GRAPHICAL
REPRESENTATION
OF
COMPARISON
IN
SERVICES:50
40
30
20
10
0
1
63
IN-BRANCH
ICICI
AXIS
ANALYSIS
If we analyze the aggregate satisfaction level, satisfaction level of ICICI BANK in INBranch services is 1.5% more than AXIS BANK and dissatisfaction level is less than
AXIS BANK.
INTERPRETATION
If we analyze the aggregate satisfaction level , satisfaction level of AXIS BANK in ease
in accessing the account is 1.8% more than ICICI BANK
Q-7:- Do you have proper knowledge about the concept of mutual fund?
Yes
No
46
21
83
64
Yes
31%
Partial, I would
like to know
more
55%
No
14%
Finding: As per the above pie chart 31% respondents had proper knowledge about the
mutual funds and 14% hid not have proper knowledge about the mutual fund. 55%
respondents wanted to know about the mutual funds as they had partial knowledge about
the mutual funds.
65
Debt
17
Debt
11%
Balanced
13
Balanced
9%
Equity
80%
Finding: As per the above pie chart 80% respondents prefer equity funds, 11%
respondents prefer debt fund and 9% preferred balanced funds.
66
0-25%
76
26-50%
60
51-75%
11
76-100%
3
51-75% 76-100%
2%
7%
0-25%
51%
26-50%
40%
Findings: As per the above pie chart 51% respondents had the invested less than 25% in
equity funds, 40% had invested in 26-50% in equity, 7% had invested in 51-75% in
equity and 2% respondent had invested 76-100% in equity funds.
67
2
.731
.359
.353
.618
a 2 components extracted.
68
2
-.665
.747
CHAPTER -6
FINDINGS, CONCLUSION
69
FINDINGS
Liquidity: It's easy to get your money out of a mutual fund. Write a check, make
a call, and you've got the cash.
Convenience: You can usually buy mutual fund shares by mail, phone, or over
the Internet.
Low cost: Mutual fund expenses are often no more than 1.5 percent of your
investment. Expenses for Index Funds are less than that, because index funds are
not actively managed. Instead, they automatically buy stock in companies that are
listed on a specific index
Transparency
Flexibility
Choice of schemes
Tax benefits
Well regulated
70
71
Even in the case of late trading which has been more or less the norm in an industry
where big corporate and distributors negotiate terms with mutual funds on a regular basis
malpractices have not been as rampant as in America.
CONCLUSION
While the mutual fund industry, thanks to its relatively small size till recently, has a bias
towards large corporate investors, governance standards overall have improved, aided
undoubtedly by significant regulatory changes over the last few years.
The only thing to complain about is that SEBI plugged the holes in the system by
following a trial-and-error approach, and not necessarily proactively. The regulatory
regime was tightened bit by bit, aided by SEBIs experiences and market forces. The pace
of regulation has actually accelerated in the last few years.
During 2002-03, for example, the regulator put out detailed guidelines on corporate
governance practices for asset management companies (AMCs). One of these was the
introduction of compulsory benchmarking of a funds performance against any chosen
index. .
This year, SEBI has also made it mandatory for the board of trustees to have two-thirds of
its strength as independent directors that is, those who are not associates of the sponsors
Another area of long-term concern is share switching. SEBI has not, so far, found a
foolproof way to prevent mutual funds from switching securities between schemes.
We regularly hold talks with AMFI and, in addition to that, we have a mutual fund
advisory committee consisting of people who are not drawn from the mutual fund
72
sector, he says. With barely two per cent of household savings going into mutual funds,
the segment has a lot of catching up to do. With post-office administered schemes and
bank deposits offering competition, more investors can be enticed to the mutual fund
industry only if it is steadily seen as very investor-friendly. Initiatives have set the
industry in the right direction, but the final destination is still some distance away.
STRUCTURE
The structure of AXIS should be in line with SEBI regulations as applicable to mutual
funds. Accordingly there should be a Sponsor, A Trustee Company and An Asset
Management Company (AMC). The Sponsor should be a Sponsoring Company in which
40% of the share capital should be held by the institutions which hold the initial capital of
AXIS of Rs.5 crores and which have made in 1999, the additional contribution of
Rs.445.5 crores pursuant to the Deepak Parekh Committee recommendations.(the
Sponsoring Institutions). 60% of the share capital of the Sponsoring Company should be
held by a Strategic Partner who is a recognized player in the market and whose reputation
and competence are expected to give the required degree of confidence to the unit
holders. The field for the selection of the Strategic Partner need not be restricted to Indian
entities. The suggested share capital of the Sponsoring Company should be Rs.550 crores
of which Rs.220 crores will be subscribed by the Sponsoring Institutions and Rs.330
crores by the Strategic Partner.
To make the desired contributions, each of the Sponsoring Institutions should convert
part or whole of their existing holdings in Unit-64 forming part of the initial capital of
Rs.5 crores and the additional contribution of Rs.445.5. crores into shares of the
Sponsoring Company. As some of the Sponsoring Institutions also own AMCs which
manage mutual funds competing with AXIS, no single Sponsoring Institution should hold
more than 25% of the share capital of the Sponsoring Company. To ensure that the
confidence of the unit-holders should not be adversely affected by a sudden withdrawal
of the Government umbrella, there should be a 'lock-in' period of three years during
which the Sponsoring Institutions may transfer their shareholding in the Sponsoring
Company amongst themselves but not to the Strategic Partner or to third parties.
73
CHAPTER -7
RECOMMENDATON
74
RECOMMENDATION
Initial contributors to AXIS should infuse permanent funds of at least Rs.500 crores.
The PSU portfolio should be transferred at book value to a Special Unit Scheme (SUS
99) to be subscribed for by GOI by the issue of dated GOI securities.
US-64 should make a strategic sale of its significant equity holdings by negotiation to the
highest bidder to ensure fetching the best value for the unit holder. The investment sublimit of Rs.10,000 for tax benefit on Equity Linked Savings Schemes should be removed
and benefit should be extended to US-64 and all schemes investing more than 50% in
equity. Income distributed by US-64 and schemes investing more than 50% in equity
should be exempt from tax. New schemes for investing in growth stocks in IT, Pharmacy
and FMCG sectors should be launched, to be subscribed for by banks. The size of the
AXIS Board should be increased to 15, with additional five members being co-opted by
the Board. Trustees should assume higher degree of responsibility and exercise greater
authority.
75
The spread between sale and repurchase prices should be gradually increased to deter
The rate of return offered to investors needs to be reviewed on a periodic basis. The
The composition of the portfolio needs to be changed to provide for more weightage
The operations of US-64 should be brought under SEBI purview at the earliest.
.
76
No Guarantees: No investment is risk free. If the entire stock market declines in value,
the value of mutual fund shares will go down as well, no matter how balanced the
portfolio. Investors encounter fewer risks when they invest in mutual funds than when
they buy and sell stocks on their own. However, anyone who invests through a mutual
fund runs the risk of losing money.
Fees and commissions: All funds charge administrative fees to cover their day-to-day
expenses. Some funds also charge sales commissions or "loads" to compensate brokers,
financial consultants, or financial planners. Even if you don't use a broker or other
financial adviser, you will pay a sales commission if you buy shares in a Load Fund.
Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20
to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales,
you will pay taxes on the income you receive, even if you reinvest the money you made.
Management risk: When you invest in a mutual fund, you depend on the fund's manager
to make the right decisions regarding the fund's portfolio. If the manager does not
perform as well as you had hoped, you might not make as much money on your
investment as you expected. Of course, if you invest in Index Funds, you forego
management risk, because these funds do not employ managers
AXIS should list five ways in which one can buy the fund units.
77
ANNEXURES
78
ANNEXURES
SAMPLE QUESTIONNAIRE
Q1) Why do we invest in mutual fund?
Growth
Income
Tax benefit
Liquidity
Q2) Who has suggested you to invest in this mutual fund?
Agent
Friend
Newspaper
TV
Q3) Do you think tax benefit also influence you for purchasing mutual fund ?
Yes
No
79
Liquid
Debt
Index
Fixed
Dissatisfied
neutral
Satisfied
dissatisfied
Very
satisfied
Very
Dissatisfied
Neutral
dissatisfied
Satisfied
Very
satisfied
Q7) Do you have proper knowledge about the concept of mutual fund?
Yes
No
Partially
80
Q8) If you prefer mutual funds as your way of investment then in which kind of
mutual fund you would prefer?
Equity
Debt
Balanced
as on
31-03-2009
(rs in thousands)
as on
31-03-2008
Rs in
thousand)
81
35,90,051
35,77,097
9,85,45,835
8,41,07,939
12,111
21,868
1,17,37,41,052
87,62,62,206
10,18,54,762
5,62,40,405
9,94,76,676
7,55,68,972
TOTAL
1,47,72,20,487
1,09,57,78,487
9,41,92,103
7,30,56,569
5,59,76,854
5,19,85,835
Investments
46,33,03,514
33,70,51,008
Advances
81,55,67,658
59,66,11,446
fixed assets
1,07,28,873
92,28,501
other assets
3,74,51,485
2,78,45,128
TOTAL
1,44,72,20,487
1,09,57,78,487
Contigent liabilities
2,09,26,03,126
2,58,89,55,997
13,95,73,115
8,32,33,927
ASSETS
year ended
year ended
31-03-2009
rs. In thousands
31-03-2008
rs.in thousands
10,83,54,856
7,00,53,151
INCOME
interest earned
82
other income
2,89,68,781
1,79,54,888
13,73,23,637
8,80,08,039
EXPENDITURE
interest expended
7,14,92,742
4,41,99,617
operating expenses
2,85,82,127
2,15,49,269
1,90,95,184
1,15,48,863
11,91,70,053
7,72,97,749
1,81,53,584
1,55,83,689
1,07,10,290
1,02,90,740
3,36,92,273
2,10,01,030
APPROPRIATIONS
Transfer to statuary reserve
Transfer to investment reserve
Transfer to capital reserve
45,38,396
622
14,67,231
26,77,572
42,05,159
25,16,380
2,34,80,865
1,55,38,689
TOTAL
3,36,92,273
2,10,01,030
Basic
50.61
32.15
Diluted
50.27
31.31
TOTAL
TOTAL
2,68,389
83
BIBLIOGRAPHY
84
BIBLIOGRAPHY
BOOKS
KOTLER PHILIP, MARKETING MANAGEMENT, Volume -6 th, ACCESS IN 10TH
JULY 2007
SHARMA RC, MONEY, BANKING AND FINANCE, BSC PUBLICATION,
ACCESS IN 15TH JUNE 2007
JOURNALS
ICFAI UNIVERSITY PRESS JOURNALS
WEB SITES
www.axisbank.com
www.mutualfundsindia.com
www.gemoney.in
85