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CHAPTER-1

INTRODUCTION

I N T R O D U C T I O N I C I C I B A N K LTD .

ICICI Bank is India's second-largest bank with total assets of about Rs.146,214crore at
December 31, 2005 and profit after tax of Rs. 1,391 crore in the nine months ended December
31, 2005.
ICICI Bank has a network of about 505 branches and extension counters and about 1,850 ATMs.
ICICI Bank offers a wide range of banking products and financial services to corporate and retail
customers through a variety of delivery channels and through its specialized subsidiaries and
affiliates in the areas of investment banking, life and non-life insurance, venture capital and
asset management.
After consideration of various corporate structuring alternatives in the context of the emerging
competitive scenario in the Indian banking industry, and the move towards Universal banking,
the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI
Bank would be the optimal strategic alternative for both entities, and would create the optimal
legal structure for the ICICI group's universal banking strategy.In October 2001, the Boards of
Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned
retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services
Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in
January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court
of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger,

the ICICI group's financing and banking operations, both wholesale and retail, have been
integrated in a single entity.

ICICI Prudential Life Insurance Company


ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier
financial powerhouse and Prudentialplc, 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. 9.25 billion with ICICI Bank and Prudential plc
holding 74% and 26% stake respectively. In the period April-December 2004, the company
garnered Rs 8.6 billion of new business premium for a total sum assured of over Rs 73.6 billion
and wrote nearly 345,000 policies. The company has a network of over 50,000 advisors; as well
as 7 banc assurance tie-ups. Today, ICICI Prudential has emerged as the No. 1 private life insurer
in the country, with a wide range of flexible products that meet the needs of the Indian customer
at every step in life

ICICI Lombard General Insurance Company


ICICI Lombard General Insurance Company Limited is a 74:26 joint venture between ICICI
Bank Limited and the US-based $ 26 billion Fairfax Financial Holdings Limited. ICICI Bank is
India's second largest bank, while Fairfax Financial Holdings is a diversified financial corporate
engaged in general insurance, reinsurance, insurance claims management and investment
management. Lombard Canada Ltd., a group company of Fairfax Financial Holdings Limited, is
one of Canada's oldest property and casualty insurers.
ICICI Lombard General Insurance Company received regulatory approvals to commence general
insurance business in August 2001.

BOARD MEMBERS

Mr. N. Vaghul, Chairman


Mr. Uday M. Chitale
Mr. P.C. Ghosh
Mr. L. N. Mittal
Mr. AnupamPuri
Mr. VinodRai
Mr. Somesh R. Sathe

Mr. P.M. Sinha


Mr. M.K. Sharma
Prof. Marti G. Subrahmanyam
Mr. V. PremWatsa
Mr. K.V. Kamath, Managing Director & Chief Executive Officer
Ms. Lalita D. Gupte, Joint Managing Director
Ms. KalpanaMorparia, Deputy Managing Director
Ms. ChandaKochhar, Executive Director
Dr. NachiketMor, Executive Directo

SERVICES PROVIDED BY ICICI BANK


1. DEPOSITS

SAVING BANK
SPECIAL SAVING ACCOUNT
SENIOR CITIZEN SERVICE
ROAMING CURRENT ACCOUNT
PRIVATE BANK
SALARY ACCOUNT
WOMENS ACCOUNT
FIXED DEPOSITS
EASY FD
RECURRING DEPOSIT
YOUNG STAR
EEFC ACCOUNT
RFC ACCOUT

2. LOAN

HOME LOAN
CAR LOAN
PERSONAL LOAN
TWO WHEELERS LOAN
LOAN AGAINST SECURITY
FARM EQUIPMENTS LOAN
COMMERCIAL VEHICLE LOAN
CONSTRUCTION EQUIPMENTS LOAN
OFFICE EQUIPMENTS LOAN
MEDICAL EQUIPMENTS LOAN

3. INVESTMENTS

ICICI BANK BONDS

MUTUAL FUNDS
PURE GOLD
INITIAL PUBLIC OFFER
GOVERNMENT OF INDIA BOND

4 . D E MAT
5. CARDS

CREDIT CARD
DEBIT CARD
TRAVEL CARD

6 . Y O U N G S TAR L O G I N
7. MOBILE BANKING
8. ONLINE SERVICES

BILL PAY
SHOPPING
TICKETING
CHARITY
SHARE TRADING

CHAPTER-2
COMPANY PROFILE

COMPANY PROFILE

ICICI Lombard General Insurance Company


Limited. (ICICI Lombard) is a 74:26 venture between ICICI Bank, India's largest private
sector bank and Lombard, one of the oldest property and casualty insurance companies in
Canada. The company received regulatory approvals to commence general insurance
business in August 2001.
Mr.SandeepBakhshi, Managing Director, ICICI Lombard, is responsible for the non-life
insurance business of ICICI Limited. He had joined ICICI in the year 1986, as an officer
in the Operations Department in the Northern Zonal Office at Delhi. His job
responsibilities included business development, project appraisals, project monitoring and
business restructuring.

He was appointed Senior Vice President in 1996 and apart from project finance was also
given the charge of the Risk Management for the Northern Zonal Office

FOLLOWING ARE THE

PRODUCTS

LOMBARD:
7

OFFERED

BY ICICI

ICICI Bank Pure Gold


Gold has been traditionally the most favoured form of investment for Indians. In fact,
India, even today is amongst the highest consumers of Gold in the world. However, the
Gold market remains largely unorganized with reliability and convenience remaining the
key issues for gold buyers in the country.
ICICI Bank with its Pure Gold offer attempts to bridge the gap between the need of the
customers for buying gold and availability of an organized avenue to satisfy that need, by
taking care of the two key components Reliability and Convenience.

Reliability:
24 Carat ICICI Bank Pure Gold is imported from Switzerland. This Gold carries a
99.99% Assay Certification, signifying highest level of purity, as per international
standards
Convenience:
ICICI Bank Pure Gold is competitively priced based on daily prices in the international
bullion market. Currently, gold is available in 8 gram and 5 gram categories,
subsequently other denominations will also be introduced

ICICI Bank through its ICICI Bank Pure Gold offering wants you to get value for money.
ICICI Bank is amongst the first banks in the country to have started perennial retailing of
Gold through its branches. The retailing of gold is done in the form of 5 and 8 gm Gold
Coins that are imported from Switzerland. The Gold coins come with an ASSAY
Certification, indicating the highest quality of gold at 99.99% purity.

Gold makes a great gift idea for valued relationships. . Gift your important relationships
ICICI Bank Pure Gold as a manifestation of your commitment to the relationship and its
quality
Some of the occasions when 'ICICI Bank Pure Gold' can be gifted are:

5 yrs. of service by an employee.

As an Award for good performance.

Marriage of an employee.

Great gift idea on Festivals like Diwali, Christmas, Id, Durga Puja etc.

Bonus for employees.

Dealers for achieving Targets.

Some Interesting Aspects About ICICI Bank Pure Gold:

It is available in Tamper proof packaging that can be customized as per your


requirement.

It is accompanied by 'Assay Certification' indicating the highest level of purity as


per international standards.

It is available throughout the year.

You can buy it through debit instructions to your account

ICICI Bank Pure Gold is of 24 Karat, 99.99% purity gold.


Gold are sold in the form of round shaped coins.
Gold are sold in 2 weights - 5gm and 8 gm.

M U T U A L F U N D S D E A LT W I T H
DURING THE SIP

FRANKLIN INDIA PRIMA FUND


Fund Name
Franklin Templeton Mutual Fund
AMC
Templeton Asset Management India Private Ltd
Type
Open-End
Fund manager
10

Mr. R Sukumar
Options
Franklin Pharma-D
Background
The scheme seeks to provide long-term capital appreciation by investing primarily in
Pharmaceutical stocks, biotechnology and agrochemicals with high profit potential.
NAV:29.53 (As on 28-Apr-2006)
Face Value
Rs.10.00
Current Corpus (Rs Lakh)
9,873.91
Entry Price (Rs)
30.19
Exit Price (Rs)
29.53
Entry Load (%)
2.25
Primary Aim
Equity
Secondary Aim
Pharma
Inception Date
31-Mar-1999
Tax Benefits u/s...
Section 54EA(Long-term Capital Gains 54EA) Section 54EB(Long-term Capital
Gains 54EB)

11

FRANKLIN INDIA BLUECHIP FUND


Fund Name
Franklin Templeton Mutual Fund
AMC
Templeton Asset Management India Private Ltd
Type
Open-End
Fund manager
Mr. R Sukumar
Options
Fraklin
Background
The scheme seeks to provide long-term capital appreciation by investing primarily in
Blue chips stocks, Larege caps with high profit potential.
NAV:29.53 (As on 28-Apr-2006)
Face Value
Rs.10.00
Current Corpus (Rs Lakh)
9,745.91
Entry Price (Rs)
30.19
Exit Price (Rs)
29.53
Entry Load (%)
2.25
Primary Aim
Equity
12

Secondary Aim
Bluechip

HDFC TAX PLAN FUND


Fund
AMC
Category
Type

HDFC Mutual Funds


HDFC Asset Management Company Ltd
Equity-Tax Planning
OpenEnded
These funds diversify their portfolio evenly across stocks and industry sectors

Objective but they carry a lock-in of 3 years and entail tax rebate under Section 88 for
investment uptoRs. 10000.
Launched31/03/1996
Fund
Dhawal Mehta since 10/01/2005
Mgr
Assets Rs.4,625.79mn as on 31/03/2006
Quick Statistics
latest
previous %
entry exit
minimum
nav
nav
change load* load* investment
Rs.145.6 Rs.145.72 -0.08% 2.25% Rs.500

initialminimum

subsequent

investment
Rs.500

Returns as on 28/04/2006
Absolute Returns
6 months
1 year
3 years* 5 years* since launch on 31/03/1996*
57.48%
103.29% 93.52%
55.99%
46.35%
*Annualised
Returns Relative to S&PCNX Nifty Total Return
6 months
1 year
3 years*
5 years*
6%
22.57%
36.58%
Asset Allocation as on 31/03/2006
asset type
Equity
Debt
Others

percentage
92.43%
0.00%
7.57%

Top Sectors as on 31/03/2006


sector
Basic/Engineering
Automobile
Metals & Metal Products
Technology

percentage of total assets


21.01%
18.29%
15.70%
9.61%
13

Chemicals

5.90%

Prudential ICICI Tax Plan Growth


Fund
AMC
Category
Type

Prudential ICICI Mutual Fund


Prudential ICICI Asset Mangement Company Ltd
Equity-Tax Planning
OpenEnded
These funds diversify their portfolio evenly across stocks and industry sectors

Objective but they carry a lock-in of 3 years and entail tax rebate under Section 88 for
investment uptoRs. 10000.
Launched09/08/1999
Fund
SankaranNaren since 01/10/2005
Mgr
Assets Rs.3,962.17mn as on 31/03/2006

14

Quick Statistics
latest previous

entry

Exit

minimum

initialminimum

subsequent

nav
nav
change load* load* investment
investment
Rs.99.9 Rs.99.91 -0.01% 2.25% Rs.500
Rs.500
Returns as on 28/04/2006
Absolute Returns
6 months
1 year
3 years*
5 years* since launch on 09/08/1999*
57.64%
103.87% 101.07% 57.62%
40.4%
6 months
1 year
3 years*
5 years*
6.16%
23.15%
44.13%
Portfolio
Asset Allocation as on 31/03/2006
asset type
Equity
Debt
Others

percentage
90.96%
1.49%
7.55%

Top Sectors as on 31/03/2006


Sector
Diversified
Chemicals
Textiles
Health Care
Automobile

percentage of total assets


15.20%
12.39%
11.00%
10.84%
9.48%

Prudential

ICICI

Dynamic

Plan-Growth
Fund
AMC
Category
Type
Objective
Launched

Prudential ICICI Mutual Fund


Prudential ICICI Asset Mangement Company Ltd
Equity-Diversified
OpenEnded
These funds diversify their portfolio evenly across stocks and industry
sectors.
18/10/2002
15

Fund Mgr
Assets

Anil Sarin since 01/10/2005


Rs.9,038.85mn as on 31/03/2006

Quick Statistics
latest
previous

entry

exit

minimum

initialminimum

nav
nav
change load* load* investment
Rs.59.64 Rs.59.42 0.37% 2.25% Rs.5000

subsequent

investment
Rs.500

Returns as on 28/04/2006
Absolute Returns
6 months
1 year
3 years* 5 years* since launch on 18/10/2002*
70.09%
119.4% 76.41%
64.29%
Returns Relative to S&P CNX Nifty
6 months
1 year
3 years*
5 years*
18.61%
38.68%
20.72%
Portfolio
Asset Allocation as on 31/03/2006
asset type
Equity
Debt
Others

percentage
94.19%
3.83%
1.98%

Top Sectors as on 31/03/2006


sector
Diversified
Technology
Consumer Non-Durable
Others
Metals & Metal Products

percentage of total assets


22.18%
19.55%
9.62%
7.31%
7.15%

SBI MagnumTaxgain
Fund
AMC
Category
Type
Objective

SBI Mutual Fund


SBI Funds Management Ltd
Equity-Tax Planning
OpenEnded
These funds diversify their portfolio evenly across stocks and industry sectors
16

but they carry a lock-in of 3 years and entail tax rebate under Section 88 for
investment uptoRs. 10000.
Launched 31/03/1993
Fund Mgr GopalAgrawal since 03/03/2006
Assets
Rs.7,054.60mn as on 31/03/2006
Quick Statistics
latest
previous %
entry exit
minimum

initialminimum

nav
nav
change load* load* investment
Rs.49.81 Rs.49.81 2.25% Rs.500
Returns as on 28/04/2006
Absolute Returns
6 months
1 year
3 years*
50.21%
100.49% 116.37%
Returns Relative to BSE Sensex
6 months
1 year
-4%
11.89%

5 years*
55.08%

subsequent

investment
-

since launch on 31/03/1993*


22.31%

3 years*
57.16%

5 years*
-

Portfolio
Asset Allocation as on 31/03/2006
asset type
Equity
Debt
Others

percentage
81.03%
6.19%
12.79%

Top Sectors as on 31/03/2006


Sector
Technology
Construction
Basic/Engineering
Diversified
Consumer Non-Durable

percentage of total assets


15.59%
13.61%
11.61%
8.00%
6.08%

SundaramTaxsaver-Growth
17

Fund
AMC
Category
Type

Sundaram Mutual Fund


Sundaram Asset Management Company Ltd
Equity-Tax Planning
OpenEnded
These funds diversify their portfolio evenly across stocks and industry sectors

Objective

but they carry a lock-in of 3 years and entail tax rebate under Section 88 for

investment uptoRs. 10000.


Launched 17/11/1999
Fund Mgr N Prasad since 01/02/2006
Assets
Rs.572.85mn as on 31/03/2006
Quick Statistics
Latest previous %
entry exit
minimum
nav
nav
Rs.27.41 Rs.27.4

initialminimum

change load* load* investment


0.04% 2.25% Rs.500

subsequent

investment
Rs.500

Returns as on 28/04/2006
Absolute Returns
6 months
1 year
3 years* 5 years* since launch on 17/11/1999*
60.48%
97.89% 82.81%
47.44%
29.57%
Returns Relative to S&PCNX Nifty Total Return
6 months
1 year
3 years*
5 years*
9%
17.17%
25.87%
Portfolio
Asset Allocation as on 31/03/2006
Asset type
Equity
Debt
Others

percentage
94.75%
0.00%
5.25%

Top Sectors as on 31/03/2006


Sector
Consumer Non-Durable
Diversified
Services
Technology
Basic/Engineering

percentage of total assets


22.08%
10.91%
10.55%
9.47%
8.91%

18

CHAPTER-3

19

OBJECTIVES OF STUDY
OBJECTIVES OF STUDY

To overview and understand the procedure & financial and accounts department of
ICICI Bank and suggest recommendations to make the existing system more
effective.

To analyse the financial statements of ICICI Bank


To determine changes in financial conditions of business.
To spot out strengths and weakness of company.
To give suggestions for the improvement of existing system so that it could
be implemented effectively with minimum cost and time.
To analyse the balance-sheet of ICICI Bank by making comparative balance
sheet of 2011 and 2012.
To spot out opportunities of ICICI Bank by calculating trend values of
netprofits.

20

CHAPTER-4
LITERATURE REVIEW

21

L I T E R ATU R E R EV I E W

A portfolio that is right for you at one point in your life may not be quite so suitable a few
years later. Your investments need to adapt to changes in your circumstances, such as
getting married, having children or starting a business. Its also a good idea to check that
each of the funds in your portfolio is living up to your expectations. Talking to an
investment advisor could help one decide whether you need to switch money between
funds.

GETTING THE RIGHT MIX


For the greatest long term growth potential one could simply invest all ones money in
equity mutual funds, right from the start of ones investing period to the end. But, of
course this would be a high risk strategy. The markets could dip just before you need the
money.
Thats why one needs to think about changing, modifying and reviewing ones
portfolio from time to time. One may want to aim for strong growth in the early years,
and then, as the years go by, lock in any gains one has made and move into lower risk
investments, such as bonds. As one gets closer to needing ones money, lower risk bond
and cash investments could be given more emphasis

What is the P/E Ratio?


P/E is short for the ratio of a company's share price to its per-share earnings. As the name
implies, to calculate the P/E you simply take the current stock price of a company and
divide by its earnings per share (EPS):

22

M a r k e t Val u e p e r S h a r e
P/E Ratio =

Earnings per Share (EPS)

Companies that aren't profitable, and consequently have a negative EPS, pose a challenge
when it comes to calculating their P/E. Opinions vary on how to deal with this. Some say
there is a negative P/E others give a P/E of 0, while most just say the P/E doesn't exist.
Historically, the average P/E ratio in the market has been around 15-25. This fluctuates
significantly depending on economic conditions at the time. The P/E can also vary widely
between different companies and industries.

Don't Buy/Short Just Because of the P/E Ratio


What goes up ... well, sometimes it stays up for an awfully long time.
A common mistake among beginning investors is the short selling of stocks because they
have a high P/E ratio. If you aren't familiar with short selling, it's an investing technique
by which an investor can make money when a shorted security falls in value. We have a
whole tutorial on short selling for you to read at your leisure.

Security analysis requires a great deal more than understanding a few ratios. While the
P/E is one part of the puzzle, it's definitely not a crystal ball.

Using the P/E Ratio


Theoretically, a stock's P/E tells us how much investors are willing to pay per rupee of
earnings. For this reason it's also called the "multiple" of a stock. In other words, a P/E
ratio of 20 suggests that investors in the stock are willing to pay Rs. 20 for every Re. 1 of
23

earnings that the company generates. However, this is a far too simplistic way of viewing
the P/E because it fails to take into account the company's growth prospects.

Growth of Earnings
Although the EPS figure in the P/E is usually based on earnings from the last four
quarters, the P/E is more than a measure of a company's past performance. It also takes
into account market expectations for the growth of a company. Remember, stock prices
reflect what investors think a company will be worth. Future growth is already accounted
for in the stock price. As a result, a better way of interpreting the P/E ratio is as a
reflection of the market's optimism concerning a company's growth prospects.
If a company has a P/E higher than the market or industry average, this means the market
is expecting big things over the next few months or years. A company with a high P/E
ratio will eventually have to live up to the high rating by substantially increasing its
earnings, or the stock price will need to drop.
Cheap or Expensive?
The P/E ratio is a much better indicator of the value of a stock than the market
price alone. For example, all things being equal, a Rs.10/- stock with a P/E of 75 is
much more "expensive" than a Rs.100/- stock with a P/E of 20. That being said, there are
limits to this form of analysis -- you can't just compare the P/Es of two different
companies to determine which is a better value.It's difficult to determine whether a
particular P/E is high or low without taking into account two main factors:
a. Company growth rates
How fast has the company been growing in the past, and are these rates expected to
increase or at least continue into the future? Something isn't right if a company has only
grown at 5% in the past and still has a stratospheric P/E. If projected growth rates don't
justify the P/E, then a stock might be overpriced. In this situation, all you have to do is
calculate the P/E using projected EPS.
24

b. Industry
It is only useful to compare companies if they are in the same industry. For example,
utilities typically have low multiples because they are low growth, stable industries. In
contrast, the technology industry is characterized by phenomenal growth rates and
constant change. Comparing a tech to a utility is useless. You should only compare high
growth companies to others in the same industry, or to the industry average.

25

CHAPTER-5
RESEARCH
METHODOLOGY

26

RESEARCH METHODOLOGY

Along with Deposit products and Loan offerings, ICICI Bank assists you to manage your finances
by providing various investment options ranging from ICICI Bank Tax Saving Bonds to Equity
Investments through Initial Public Offers and Investment in Pure Gold. ICICI Bank facilitates
following investment products:

ICICI Bank Tax Saving Bonds


Government of India Bonds
Investment in Mutual Funds
Initial Public Offers by Corporate
Investment in "Pure Gold"

ICICI BANK BONDS


Bonds are similar to Fixed Deposits. Like fixed deposit receipts, Bonds are normally issued by a
bank, a financial institution or a company, for a fixed period. A specified rate of interest is
payable to the investor at regular intervals. However, unlike Bonds, Fixed Deposits are not
transferable. Also, while Bonds may be secured or unsecured, Fixed Deposits are always
unsecured.

GOI BONDS
8 % S a v i n g s B o n d s ( Tax a b l e ) , 2 0 0 3

Low risk.
Reasonable investment tenure.
Nomination facility available.
Cannot be traded in secondary market.
Interest income taxable.

INVESTMENT IN IPO'S
Customer can invest in IPOs through ICICI Bank which offers hassle-free & convenient of
investing in equities. ICICI Bank helps in gathering in-depth analyses of new IPOs issues (Initial
Public Offerings) which are about to hit the market.

ICICI BANK PURE GOLD


27

Gold has been traditionally the most favored form of investment for Indians. In fact, India, even
today is amongst the highest consumers of Gold in the world. However, the Gold market remains
largely unorganized with reliability and convenience remaining the key issues for gold buyers in
the country.
ICICI Bank with its Pure Gold offer attempts to bridge the gap between the need of the
customers for buying gold and availability of an organized avenue to satisfy that need, by taking
care of the two key components Reliability and Convenience.

INVESTMENT IN IPO'S
Investors can invest in IPOs through ICICI Bank which offers hassle-free & convenient investing
in equities. ICICI Bank helps in gathering in-depth analysis of new IPOs issues (Initial Public
Offerings) which are about to hit the market.

TRADITIONAL INVESTMENT OPTIONS


ICICI Bank offers wide variety of Deposit Products to suit Investors requirements.
Coupled with convenience of networked branches with over 1800 ATMs and facility of
E-channels like Internet and Mobile Banking, ICICI Bank brings banking at Customers
doorstep. There are three Options available to the investors.

Fixed Deposits
Savings Account
Recurring Deposit

Fixed Deposits
Safety, Flexibility, Liquidity and Returns!!!!
A combination of unbeatable features of the Fixed Deposit from ICICI Bank.

Fixed Deposit

Wide range of tenures


Choice of investment plans
Partial withdrawal permitted
Safe custody of fixed deposit receipts
Auto renewal possible
Loan facility available

28

Easy Deposit

Free Debit/ATM card


No need to open a Savings account.
Options of Easy Withdrawal and Easy Loan
Wide range of tenures
Auto renewal possible
Loan facility available

Benefits of Fixed Deposits

A wide range of tenures, ranging from 15 days to 10 years, to suit your investment plan.
Partial withdrawal is permitted in units of Rs 1,000. The balance amount earns the

original rate of interest.


Safe custody of your fixed deposit receipts.
Auto renewal is provided.
Loan facility is available upto 90% of principal and accrued interest.
Choice of two investment plans: Traditional or Reinvestment.

Savings Account
ICICI Bank offers Savings Account with a host of convenient features and banking channels to
transact through.

Savings Account

Debit-cum-ATM card
Auto Invest Account
Internet Banking
Phone Banking
Anywhere Banking
Standing instructions
Nomination facility
Doorstep service

Special Savings Account

Comprehensive Banking
Solutions with added features
Anywhere Banking
Ideal for tax-exempt entities
Internet Banking

29

Features

The ICICI Bank Ncash debit card is a debit-cum-ATM card providing you with the

convenience of acceptance at merchant establishments and cash withdrawals at ATMs.


Auto Invest Account
Internet Banking is offered free of cost.
Anywhere Banking - This facility entitles the account holder to withdraw or deposit cash

upto a limit of Rs.50,000 across all ICICI Bank branches.


You can give us various types of standing instructions like transferring to fixed deposit

accounts at regular intervals.


An average quarterly balance of Rs 5,000 only.
Nomination facility is available.
Interest is payable half-yearly.

Senior Citizen Services

ICICI Bank offers an ideal Banking Service for those who are 60 years and above. The Senior
Citizen Services from ICICI Bank has several advantages that are tailored to bring convenience.

Senior Citizen Services

Higher Interest Rates


Special Demand Loans against deposit
Free collection of outstation cheques drawn on our locations
Debit-cum-ATM card
Auto Invest Account
Internet Banking
Phone Banking
Anywhere Banking
Standing instructions
Nomination facility

You n g S t a r s
ICICI Bank helps children learn the value of finances and money management at an early age.
Banking is a serious business and ICICI Bank aims to teach the young crowd how to manage
their personal finances.

Recurring Deposits

30

When expenses are high, one might not be having adequate funds to make big investments.
Through ICICI Bank Recurring Deposit one can invest small amounts of money every month that
ends up with a large saving on maturity. So you enjoy twin advantages- affordability and higher
earnings.

Recurring Deposit

Encourages savings
High interest rates of interest
Loans against deposits available
Non-applicability of Tax Deduction at Source (TDS)
Encourages savings without stress on your finances.
High rates of interest (identical to the fixed deposit rates).
Non-applicability of Tax Deduction at Source (TDS).

Mutual Funds:
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
these investments and the capital apperceptions realized are shared by its unit holders in
proportion to the numbers of units owned by them .Thus, Mutual fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified , professionally managed basket of securities at a relatively low cost.
There are two basic types of mutual funds. "Open-ended" or "Open" mutualfunds are
the most common type of mutual funds. Investors may purchase units from the fund
sponsor or redeem units at the valuation promised in the fund documents, usually on a
daily basis. "Closed-ended" or "Closed" mutual funds are traded as financial
securities, once they are issued, and holders must sell their units on the stock market to
receive their funds back.

Open Mutual Funds


Open mutual funds are established by a fund sponsor, usually a mutual fund company.
The sponsor has promised in the documents of the fund that it will issue and refund or
31

units of the fund at the fund unit value. This type of fund is valued by the fund company
or an outside valuation agent.
Open mutual funds keep some portion of their assets in short-term and money market
securities to provide available funds for redemptions. A large portion of most open
mutual funds is invested in highly "liquid securities", which means that the fund can raise
money by selling securities at prices very close to those used for valuations.

Closed Mutual Funds


Closed mutual funds are really financial securities that are traded on the stock market. A
sponsor, a mutual fund company or investment dealer, will create a "trust fund" that
raises funds through an underwriting to be invested in a specific fashion. The fund retains
an investment manager to manage the fund assets in the manner specified.

Once

underwritten, closed mutual funds trade on stock exchanges like stocks or bonds.
Aggressive Growth Funds

Aggressive growth funds aim to maximize capital gains (buy low and sell high). These
funds may leverage their assets by borrowing funds, and may trade in stock options.
These funds often have low, current yields. Because they don't invest for dividend
income, and often have little cash in interest-bearing accounts, short-term yield is not
optimized.

Growth Funds
Growth funds are similar to aggressive growth funds, but do not usually trade stock
options or borrow money with which to trade. Most growth funds surpass the S&P 500
during bull markets, but do a little worse than average during bear markets.
Just as in aggressive growth funds, growth funds are not aimed at the short-term market
timer. The aggressive investor may find that they are an ideal complement for aggressive
growth funds, as the differing investment strategies used by the two types of funds can
produce maximum gains.

32

The volatility of these funds makes them inappropriate as the sole investment vehicle for
risk-averse investors.
Examples:
1) Reliance Growth Fund
2) HDFC Growth Fund
3) Prudential ICICI Growth Fund

Growth-Income Funds
Growth-income funds are specialists in blue chip stocks. These funds invest in utilities,
Dow industrials, and other seasoned stocks. They work to maximize dividend income
while also generating capital gains. These funds are suitable as a substitute for
conservative investment in the stock market.

Income Funds
Income funds focus on dividend income, while also enjoying the capital gains that
usually accompany investment in common and preferred stocks. These funds are
particularly favored by conservative investors.
Examples:
Tata Income Fund
Birla Income Plus Fund
Prudential ICICI Income Fund.

International Funds
International funds hold primarily foreign securities. There are two elements of risk in
this investment: the normal economic risk of holding stocks; as well as the currency risk
associated with repatriating money after taking the investment profits. These funds are an
vital aspect of many portfolios, but any individual fund may prove too volatile for the
average investor as the sole investment.

Asset Allocation Funds


Asset allocation funds don't invest in just stocks. Instead, they focus on stocks, bonds,
gold, real estate, and money market funds. This portfolio approach decreases the reliance
33

on any one segment of the marketplace, easing any declines. A plus factor is limited by
this strategy as well.

Precious Metal Funds


Precious metal funds invest in gold, silver, and platinum. Gold and silver often move in
the opposite direction from the stock market, and thus these funds can provide a hedge
against investments in commonstocks.

Bond Funds
Bond funds invest in corporate and government bonds. A common misunderstanding
among investors is that the return on a bond fund is similar to the returns of the bonds
purchased. One might expect that a fund that owns primarily 8 percent-yielding bonds
would return 8 percent to investors. In fact, the yield from the fund is based primarily on
the trading of bonds, which are extraordinarily sensitive to interest rates.
Mutual Funds can also be classified into three categories viz. Equity Funds, Debt Funds
and Balanced Funds

EQUITY FUNDS
These funds invest a major part of their corpus in equities. The composition of the fund
may vary from scheme to scheme and the fund managers outlook on various scrips. The
Equity Funds are sub-classified depending upon their investment objective, as follows:
Diversified Equity Funds
Mid-Cap Funds
Sector Specific Funds
Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon. Equity funds rank high on the
risk-return matrix.

DEBT FUNDS
These Funds invest a major portion of their corpus in debt papers. Government
authorities, private companies, banks and financial institutions are some of the major
34

issuers of debt papers. By investing in debt instruments, these funds ensure low risk
and provide stable income to the investors. Debt funds are further classified as:

Gilt Funds: Invest their corpus in securities issued by Government, popularly known as
GoI debt papers. These Funds carry zero Default risk but are associated with Interest Rate
risk.These schemes are safer as they invest in papers backed by Government.
Examples:Birla Gilt Fund,Prudential ICICI Gilt Investment.
Income Funds: Invest a major portion into various debt instruments such as bonds,
corporate debentures and Government securities.
MIPs: Invests around 80% of their total corpus in debt instruments while the rest of the
portion is invested in equities. It gets benefit of both equity and debt market. These
scheme ranks slightly high on the risk-return matrix when compared with other debt
schemes.
Short Term Plans (STPs): Meant for investors with an investment horizon of 3-6
months. These funds primarily invest in short term papers like Certificate of Deposits
(CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in
corporate debentures.
Liquid Funds: Also known as Money Market Schemes, These funds are meant to
provide easy liquidity and preservation of capital. These schemes invest in short-term
instruments like Treasury Bills, inter-bank call money market, CPs and CDs. These funds
are meant for short-term cash management of corporate houses and are meant for an
investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix
and are considered to be the safest amongst all categories of mutual funds. Examples:
Birla Cash Fund, HSBC Cash Fund

35

BALANCED FUNDS
These funds, as the name suggests, are a mix of both equity and debt funds. They invest
in both equities and fixed income securities, which are in line with pre-defined
investment objective of the scheme.
These schemes aim to provide investors with the best of both the worlds. Equity part
provides growth and the debt part provides stability in returns.

O P T I O N S AVAI L A B L E T O I N V E S T O R S
Each plan of every mutual fund has three options Growth, Dividend and dividend
reinvestment. Separate NAV are calculated for each scheme.

Dividend Option :Under the dividend plan dividend are usually declared on quarterly or annual basis.
Mutual fund reserves the right to change the frequency of dividend declared.

Dividend reinvestment option :Instead of remittances of units through payouts, Units holder may choose to invest the
entire dividend in additional units of the scheme at NAV related prices of the next
working day after the record date. No sales or entry load is levied on dividend reinvest.
Dividend Payout option:Dividend declared by the fund manager is remitted to the investors and NAV is reduced
by that value..

Growth Option
Under this plan returns accrue to the investor in the form of capital appreciation as
reflected in the NAV. The scheme will not declare the dividend under the Growth plan
and investors who opt for this plan will not receive any income from the scheme. Instead

36

of income earned on their units will remain invested within the scheme and will be
reflected in the NAV.

C a l c u l a t i o n O f N AV

37

Insurance:
Life Insurance is a contract that pledges payment of an amount to the person assured ( or
his nominee) on the happening of the event insured against.
The contract is valid for payment of the insured amount during

The date of maturity

Specified dates at periodic intervals,

Unfortunate death, if it occurs earlier.

The various Insurance schemes dealt at ICICI Bank are:

1)Life Time Pension Plan.


2)Smart Kid
3)Life Time Plan.
4)Life Link Super

LIFE TIME PLAN


( Tax r e b a t e u / s 8 0 C C C )

ICICI PruLifeTime

38

Life is about changes. Some you expect - marriage, children, retirementand some you
dont - sickness, disability, and death. We, at ICICI Prudential, believe that life should not
have to be about fear of the unexpected and that you should be in control so as to
overcome them. To be in total control of lifes situations you need total flexibility.
A Policy that meets your changing needs over a Lifetime
Your need for insurance is important, to protect your family but you also have an equal
need to invest your money for greater returns. How do you strike a balance between these
competing needs?
Welcome to a new horizon in financial planning. ICICI PruLifeTime gives you the
flexibility and control in meeting your protection and investment needs. With this plan
you have the freedom to direct your investment to get the benefit of market linked returns
and choose the level of protection. And because youre in charge you can accommodate
your changing needs.
But thats not all. You can do all this too:
Vary the amount of insurance protection vis--vis investment while maintaining the same
premium
Enhance insurance protection by adding Accident & Disability Benefit, Major Surgical
Assistance, Critical Illness benefits at a nominal extra premium
Top up your investment with a lump sum payment at any time
Switch between our choice of plans growth, balanced and income
Enjoy tax benefits on the premium paid
Total flexibility, Total control and Total protection All in one go.
How do I start?
You can open an account with a Minimum Premium of
Rs 18,000/- p.a. for annual mode
Rs 9,000/- per half year for half-yearly mode
Rs 4,500/- per quarter for quarterly mode
Rs 1,500/- per month for monthly mode

39

How does the plan work?


You can choose a specified level of protection according to your need. Part of the
premium paid will be used to pay for the death benefit and the rest is invested in plan of
your choice. Entry into the plan will be based on the Unit Value applicable on the date of
policy issue. The amount of premium towards death benefit decreases with the increase in
the value of the units.
How do you benefit?
Death Benefit: In case of the unfortunate event of death, your near and dear ones are
spared an uncertain future. They will be taken care of through our guaranteed death
benefit. The nominee/s will receive the death benefit chosen (less any withdrawals) or
value of the units, whichever is higher. 1
Withdrawal Benefit: There is no maturity date. Anytime after 3 years of commencement
(provided you have paid premium for 3 full years) you can make withdrawals through
partial or complete surrender of units.2
What are your flexibility options?
a. Can you choose the kind of returns you want?
Yes, you can. By choosing between our Growth Plan, Income Plan or Balanced
Plan.
Growth Plan: If high growth is your priority this is the plan for you. You can enjoy longterm capital appreciation from a portfolio that is invested primarily in equity and equityrelated securities.
Income Plan: If on the other hand your priority is steady returns, you can opt for the
Income Plan. Here you can accumulate a steady income at a low risk across a medium to
long term period.
Balanced Plan: If you prefer a balance of growth and steady returns choose our Balanced
Plan. This would ensure that your portfolio is invested in equity and equity-linked
securities as well as in fixed income securities.

40

b. But, what if you want to change your plan later?


If at a later stage your financial priorities change, you can switch between the various
plan options, and we also let you do this absolutely free once a year.
c. What if you have more investible funds at the year-end than you had calculated?
You can top up your investment (minimum Rs 10,000) at any time when you have
surplus funds.
d. What if you feel the need to increase your protection?
At various stages of your life your liabilities may increase - marriage, children, a new
home, children going off for higher studiesICICI PruLifeTime lets you increase your
death benefit without any underwriting during special events 3 or every third year upto 3
times. This increase is @ 25% of original death benefit or Rs 250,000 whichever is lower
each time. You can also increase your protection at other times or for higher levels
subject
to underwriting rules.
e. And, what if you want to decrease the death benefits?
Over time your liabilities may decrease too, as various loans get paid off, your children
become independent and so on. So, if you want to decrease your death benefits you can
do that too, at any time.4
f. What if you are unable to pay the premiums?
If after at least 3 years payments are made and you are unable to pay the subsequent
premiums, the cover under the policy will continue and the premiums towards the life
cover and riders will be debited from the unit fund.5

Can you get any add ons


We ensure that you are prepared for any eventuality, with a choice of riders along with
the death benefits.
41

Double accident benefit

Disability Benefits

Critical Illness

Surgical Assistance

How is unit value calculated?


Unit value is calculated bi-weekly on a forward pricing basis every Tuesday and Friday
Unit Value =
Market/ Fair Value of the relevant Plans Investments plus Current Assets lessCurrent
Liabilities and Provisions
Number of Units outstanding under the relevant Plan
What are the Tax benefits?
The

premiums

paid

by

you

are

eligible

for

tax

exemption

u/s

88.

Any amount paid to you in form of withdrawals or other benefits are completely tax-free
u/s 10 (10D).
What are the limits or conditions applicable?
Age at entry
Minimum age at entry: 0 years (completed years)
Maximum age at entry: 60 years (completed years)
What are the charges?

Allocation is 80% of premium in the first year, 92.5% in the second years and
96% from the third year onwards

Mortality charge towards death benefit


42

Annual administrative charges of 1.25% per annum of net assets and annual
investment charge of 1% per annum of net assets

Initial charges of 1% on Top-ups

One free switch every year after which a switching fee of 1% of the switching
amount will be levied. Any unutilized free switch cannot be carried forward.

Note: In case the unit value is inadequate to cover charges, the policy will terminate.
Find out if the ICICI Pru LifeTime policy suits you
For more queries and detailed information, do call our ICICI Pru Advisor. That way, you
can learn how best to cover your life!

Revision of charges
The Company reserves the right to change the investment charge at any time with prior
approval from the Insurance Regulatory and Development Authority upto a maximum of
1.50% per annum of the net assets for each of the plans.
The Company reserves the right to change the annual administrative charge at any time
with prior approval from the Insurance Regulatory and Development Authority upto a
maximum of 2% per annum of the net assets for each of the plans.
The Company reserves the right to modify the Insurance charges and the Processing
charge with prospective effect after a giving a notice of three months to the policyholders.

43

LIFETIME PENSION PLAN


( Tax r e b a t e u / s 8 0 C C C )

L i f e T i m e P e n s i o n P l a n gives the freedom to choose the amount of


premium, and invest in market-linked funds, to generate potentially higher returns. On
the future retirement date, the accumulated value of the units will be used to purchase an
annuity - to provide the investor with regular income for life.
Power to choose the protection level: One can choose from either a Zero sum assured
or a sum assured, which will be equal to the product of the annual contribution and term.
Power to choose the retirement date: We can also take advantage of market movements
by choosing a vesting age between 45 - 75 years of age.

44

Power to increase your investments: Usage of surplus funds to top-up investments


during the deferment period.
Power to invest in a plan based on your priorities: Choice amongst four funds, based
on the investment objective and risk appetite. Facility of switch available between the
various fund options,4 times a year.
Power to increase / decrease your contribution: Based on your requirements, increase
or decrease contribution

45

CHAPTER-6
DATA ANLYSIS

46

D ATA AN LYS I S
Invested sectors of different funds

From the figure it is clear that PRUDENTIAL ICICI DYNAMIC FUND has the
maximum no. Of sectors, so this shows that , this fund is more diversified than others so
with rising market , this fund gives more returns than other fund.

Beta of different Funds

47

Beta is the measure of a security's or portfolio's volatility, or systematic risk, in


comparison to the market as a whole. So, as the beta is near 1 it is more better fund and
that fund price increases with the increasing market. In this case, PRUDENTIAL ICICI
TAX PLAN is near to 1. So, with increasing market, this fund will provide more returns
to the investors than the other funds

Standard Deviation of Different Funds

Standard Deviation Explains the difference between the expected returns and the actual
returns. So more the standard deviation more risky the fund is so in that manner
FRAKLIN INDIA PRIMA FUND
Is the best fund within these all funds

R-Square

48

R-squared describes the level of association between the fund's volatility and market risk, or more
specifically, the degree to which a fund's volatility is a result of the day-to-day fluctuations
experienced by the overall market. So ,
R-Square nearer to 1 explains that Beta gives the best result with comparison to that of the
market.

Sharp Ratio

Now , SHARPE RATIO is given by the equation

So , Sharpe Ratio is indirectly related to the Standard Deviation so fund with low Standard
Deviation gives high Sharpe Ratio which in turn gives high portfolio Return. So, in this case
FRAKLIN INDIA PRIMA FUND comes as a good fund.

49

7%

14%

41%
<25

25-40

38%
61 and above

41-60

Age
Fig. 1
Interpretation:
This question was asked to know in wich category does the investor fall in:
Young (<25%,25-40)
Middle(41-60)
Old(61and above)
So from the fig. It is clear that the max. Customers were young Investors.

30%
Non Matric2

SSC/HSC

2% 6%
24%
Graduate

38%

Post graduate

Professional

Edu
cation
Fig. 2
Interpretation:
From the fig it is clear that Most of the correspondents were well educated proving the
fact that nowadays peoples literacy rate is increasing.

50

5%

18%
7%
19%
Salaried

Student

Business

Retired

51%

Self Employed18

Occupati
on
Fig. 3
Interpretation:
From the fig. We get that max. Correspondents were salaried persons next were business
persons and then came those who were having there own setup that is there own business
like shops etc.

7%

10%

36%
Below 10,000

10,000-30,000

31000-50,000

47%
50,000 and above

Income
Fig. 4
Interpretation:
Above fig tells us the income pattern of the customer which in return helps us in deciding
which product can be explained to him which suits to his income.
51

17%

31%

12%
10%

12% 15%

20%

28%

25%

more%

Percentag
e of Saving to income
Fig. 5
Interpretation:
The fig shows that , the correspondents being young investors so there savings are also
less thatis why 31% people have said that they save only 10% of ther income which is a
good news for bank because these people can be made to save more if offered good
products necessary for them.

Investment & Insurance

Saving Acount

29%
15%

37%

Fixed Deposit
Recurring Deposit

19%

Other Investments and


Insurance Schemes

Fig. 6
Interpretation:

52

The above information helps us to understand the past portfolio of the customer so that he
can be provided with the products that he has never explored. Although, customers with
saving Accounts weremax.

Anticipated Investment time frame


16%

20%

29%

Short

Short- Medium Term

Medium35%
Term

Long Term

Fig. 7
Interpretation:
This was asked to know , for how much the investor wants to keep his money in the
market so that he can be given a investment optionfor that particular duration and which
can maximise his returns.so, i found that most of the people were ready to invest their
money in the market for a shorter- Medium Term i.e for 1-3 yrs.

15%

I Agree

I41%
Disagree

32%
I Somewhat Agree
13%

I Strongly Agree

Risk

&

returns investment
Fig. 8
Interpretation:
This question helped me in deciding the portfolio mix of the customer. Mostly the
customer wanted a mix of equity and debt in his portfolio so that he can earn profits from
53

the portion invested in equity and some of his portion can be safe in debt
securities.Although, Most of the Business people were ready to take risk to gain
maximum returns.

16%
15%
Good

Not very Good

Very Good

69%

Unstable

Immediate family's overall financial situation


Fig. 9
Interpretation:
This helped to understand what exactly can be the invetsment amount of the customer
and then deciding about the best product that can be given to him which will give best
returns on the amount invested by him.

Capital and some Income

Income only
4%
11%

39%
Capital and some Income

4%

Balance of Income and Capital Growth

42%

Income and some Capital Growth

I
nvestment on vehicle
Fig. 10
54

Interpretation:
Maximum investors considered Balance of Income and Capital Growth as there key
objective of investment Vehicle so that they can earn whenever they need the money and
their capital should also be increasng.
Level of knowledge on investment and its products

33%

35%
Low

Medium

32%

High

None

Fig. 11
Interpretation:
This helped us in understanding that most of the customer surveyed were knowledgeable about
the investments and different products, simultaneously

There were customers who were having little or poor knowledge about the investmentsso
they needed to be made aware about investment

16%
20%
Life Insurance

Health Insurance

64%

Investm ents

Priority
your life
Fig. 12

55

in

Interpretation:
From the fig. It is clear that Life Insurance is the top most prirority in their life. Although
ther are some who give prirority to investment returns as most of them are young and
some give to health insurance

Have any insurance

35%
Yes

No

65%

Fig. 13
Interpretation:
From the fig. 13 Most of the customers were having insurance but the rest people needed
to be made aware about the Insurance and can be tried to make that percent to full 100%.

Income Earning Capacity

42%
58%
Yes

No

Fig. 14
Interpretation:

56

Most of the people were aware about their IEC i.e Income Earning Capacity.This data
helped me to get those people who were not aware of their income earning capacity and
after making them aware ,many of them got their life insured.

49%

51%
No

Yes

Insurance
Covers Your

Fig. 15
Interpretation:
Although aware about their income earning capacity not everybody insurance was
covering their IEC so these people can be once again explained the need of insurance in
any body life and how IEC is related to Insurance.

57

58

R E C O M M E N D ATI O N S
S T A R T E A R LY
The sooner you invest, the more time your money will have to grow. If you delay, you
will almost certainly have to invest much more to achieve a similar result.

I L L U S T R ATI O N

Suppose

you

start

investing

in

35 yrs

40 yrs

You r m o n t h l y i n v e s t m e n t

Rs.5000/-

Rs.5000/-

You s t o p i n v e s t i n g a t a g e

60 yrs

60 yrs

You r t o t a l c o n t r i b u t i o n

Rs.15,00,000/-

Rs.12,00,000/-

Rs.1,37,82,803

Rs.66,35,367

(over 1 crore)

(over

diversified equity mutual fund through a


SIP at age

Assuming compounded annualized returns


from the fund of 15% your savings could
grow to

59

lakhs)

66

A difference of just 5 years can lead to a wealth difference of Rs. 71


lakhs!!!!!!

THE DIFFERENCE TIME CAN MAKE


If you started investing Rs.5000/- a month on your 40 th birthday and If that investment
grew by an average of 15%, it would be worth Rs.66, 35,367/- when you reach 60 years
of age.

If you started investing five years earlier at 35, years. and Assuming the same average
annual growth of 15%, you would have Rs.1,37,82,803/- on your 60th birthday Rs.71
lakhs more than you would have received if you had started investing 5 years later at age
40.
The bottom line your investments gain most from compounded interest when you
have time on your side.

KE EP SOM E CASH ASID E


It is always a good idea to have some money in a deposit account in case of emergencies.
Enough to cover three months living expenses is often a rough guide to how much
money you need as cash with you. And make sure you can withdraw it when you need
to, without penalties.

REASONS YOU MIGHT NEEDYOUR MONEY AT SHORT NOTICE:


---- making a major purchase
---- taking an unplanned holiday
60

---- seeing you through an emergency such as sudden hospitalization or job loss

A S K Y O U R S E L F H O W M U C H R I S K Y O U C A N TA K E

There is absolutely no point having a stock market investment if you are going to lose
sleep every time share prices go through a rough patch. Its vital that you are realistic
about your appetite for risk an Investment Adviser may be help to help you decide how
much risk you can tolerate.
In many ways, the key organ for investing is the stomach, not the brain. What is your
stomach going to do when an investment your brain selected declines for a year or two?
--- Peter Lynch, Vice Chairman,
Fidelity Management & Research Company
(Former fund manager of Fidelity Magellan Fund)

B E A R I N M I N D TH AT I N F L ATI O N WI L L E AT I N TO
Y O U R S AVI N G S
Returns on risk-free cash investments may sound respectable, but when you subtract the
current rate of inflation you may not be so impressed. For significant long term growth
you need to make your money work a little harder.

INFLATION THE TICKING TIME BOMB


If you have Rs.10, 000/- in a savings account earning 3% interest each year, in 20 years
time, your saving would be worth Rs.18, 061/-. Thats a return of just over 80%.

61

However, if inflation is about 7%, Rs.18, 601 would only be worth Rs.4, 668/- in todays
terms!!!!!

T H I N K C A R E F U L LY A B O U T H O W L O N G Y O U W I L L
BE INVESTING FOR
Only look at the stock market if you are prepared to put your money away for five to ten
years, or perhaps even longer. If you are likely to need your money any sooner, keep it in
a lower-risk investment so there is less chance of a fall in value just before you make a
withdrawal.
If youre going to need money within the near future to pay for college tuition or put a
down payment on a house- the stock market is not the place to be. You can flip a coin
over where the market is headed over the next year. But if you are in the market for the
long haul five, ten or twenty years then time is on your side and you should stick to
your long term investment plan.
--- Peter Lynch, Vice Chairman,
Fidelity Management & Research Company
(Former fund manager of Fidelity Magellan Fund)

NEV ER PUT AL L YOUR EGGS IN ONE BASKE T

Its rarely a good idea to have all your eggs in one basket. Depending on ones goals and
ones attitude towards risk, an investor should spread his money across different types of
investment equities, bonds and cash. An investor should also try to diversify within
each of these categories. With equities, for example a mutual fund will invest your
money in a variety of companies but you may want to ensure you have a range of
industry sectors too.

I N V E S T R E G U L A R LY
62

Investing regularly can be a great way to build up a significant lump sum. The investor
can also benefit from what is known as the concept of Rupee cost averaging. This
means that, if an investor is investing in a mutual fund, over the years he will pay the
average price for units. If the market goes up, the unit one already own will increase in
value. If the market goes down, the next installment to be paid by the investor will fetch
him more units.

T H E P O W E R O F R U P E E C O S T AVE R A G I N G
The table below illustrates the power of rupee cost averaging. It compares the returns
achieved by a lump-sum investor and an investor who saves the same amount every
month for six months
LUMP SUM INVESTMENT
S A VE R
Month

Unit Price Amount

Unit

Amount

Units

(Rs.)

Invested

Bought

Invested

Bought*

(RS.)
60000
60000

3000
-

10000
10000
10000
10000
10000
10000

1
20
2
18
3
14
4
22
5
26
6
20
Total Invested (Rs.)
Aver ag e Pr i ce P aid
20
Total

No.

REGULAR

of

Units

500
555
714
454
384
500
60000
20

Bought

3000

3107
Val u e o f I n v e s t m e n t
After

Six

Months

(Rs.)

60000

62140

63

As it is clearly evident from the above example that, the regular saver finishes with an
investment that is worth more than the lump-sum investors after six months even
though the starting price, finishing price and average price are exactly the same.

C H O O S E Y O U R F U N D S C A R E F U L LY
An investor should select investments on the basis of what is right for ones personal
circumstances and goals. If one is deciding on a mutual fund to invest in, then dont opt
for the one which is the flavor of the month, unless one is sure that it will be right for
ones needs in the years to come. And an investor should not assume that all funds
investing in Indian equities are essentially the same look at the details of what a fund
invests in and check if one is comfortable with its investment style and objectives

F AS H I O N C O M E A N D G O
Funds that invest in specialist industry sectors have been very fashionable recently, but
are they a good idea? The table below shows the performance of four different industry
sectors over the past five years.As it is evident from the table below that no sector
performed consistently well every single year.

Industry Sector

Information

2000(%

2001(

2002(%)

2003(%

2004(%)

%)

-37.2

-39.4

4.1

23

24.7

-4.2

73.9

144.2

11.6

Technolog y(BSE
IT INDEX)

Public

Sector -37

Utilities(BSE
PSU Index)

64

Capital

Goods -35.9

-19.6

47.8

167.8

27.2

-10.9

-11.4

35.4

-6.9

(BSE CG Index)

Consumer

goods

(BSE

FMCG

-7.2

Index)

REM EMB ER THAT TIME NO T TIMING IS TH E KEY


TO SUCCESSFUL INVESTING
When an investor is planning an investment, it can be tempting to wait for the market to
reach a low point. But how will he know when this happens? The investor runs the risk
of missing out on the significant rises that often occur in the early days of an upward
trend. Even the experts cannot time the market with consistent success. It is better to
choose an investment that one feels confident about and take a long term view, so that
one has the time to ride out any ups and downs in the market.

A FEW DAYS CAN MAKE ALL THE DIFFERENCE


Take a look at the returns from the Indian market (both actively managed funds and the
BSE sensex 30) between 1996 and 2004. This analysis shows that missing just a few of
the best days can significantly affect investment performance.

65

CHAPTER-7
LIMITATIONS
66

67

L I M I T AT I O N S

The P/E ratio is the current stock price of a company divided by its earnings per share

(EPS).
Variations exist using trailing EPS, forward EPS, or an average of the two.
Theoretically, a stock's P/E tells us how much investors are willing to pay per dollar of

earnings.
A better interpretation of the P/E ratio is to see it as a reflection of the market's optimism

concerning a firm's growth prospects.


The P/E ratio is a much better indicator of a stock's value than the market price alone.
In general, it's difficult to say whether a particular P/E is high or low without taking into

account growth rates and the industry.


Changes in accounting rules as well as differing EPS calculations can make analysis

difficult.
P/E ratios are generally lower during times of high inflation.
There are many explanations as to why a company has a low P/E.
Don't base any buy or sell decision on the multiple alone.

68

CHAPTER-8
FINDINGS

69

FINDINGS
1.

I found that ICICI is not as accessible - as is required.

2.

LIFE TIME PENSION is having higher premium.

3.

LIFE TIME PENSION is having higher administration charges as compared with


other investment modules.

4.

Lack of knowledge about customer requirements.

5.

It is difficult for working class to spare time for training.

70

CHAPTER-9
SUGGESTIONS

71

SUGGESTIONS

For a new investor who wants to invest his funds at minimum risk for a long term period
should in Banking sector in companies like SBI or ICICI, because these companies show
a consistent upward trend in the observed period

For investor who prefers to trade for maximum return at high risk is suggested to invest
in IT Sector in companies like Infosys, whose share price touched a maximum of 5374.43
in May 2004, and also shows high fluctuations in the observed period.

Therefore A individual is suggested to invest long term funds in banking sector


where short term investment should be done in IT sector

72

CHAPTER-10
CONCLUSION

73

CONCLUSION
This explanation of these four statistical measures provides you with the basic knowledge
on using them to apply the premise of the optimal portfolio theory, which uses volatility
to establish risk and states a guideline for determining how much of a fund's volatility
carries a higher potential for return. As you may have noticed, these figures may be
difficult and complicated to understand, but if you do use them, it is important you know
what they mean. Do keep in mind that these calculations only work within one type of
risk analysis. When you are deciding on buying mutual funds it is important that you be
aware of factors other than volatility that affect and indicate the risk posed by mutual
funds.

74

BIBLIOGRAPHY

75

BIBLIOGRAPHY
Magazines
Outlook Money
Mutual Funds review (ICICI investment guide meant for internal circulation)
Business Today
Business World.
www.icicibank.com.
www.franklinindiatempelton.com
www.prudentialicici.com
www.reliancemutualfund.com
www.hdfc.com
www.hsbc.com
www.nseindia.com
www.bseindia.com
www.amfiindia.com
www.mutualfundsindia.com
www.indiainfoline.com
www.valueresearchonline.com
www.indiainfoline.com
www.iciciprudential.com
Fact Sheets, Fund Statements and Web Sites of

76

ANNEXURE

77

PROJECT QUESTIONNAIRE:
Name:....................................
Address:..................................
....................................
.........................................
1) How old are you ?
a) Under 25.
b) 25-40
c) 41-60
d) 61 and above.
2 ) Education
a)Non Matric

b)SSC/HSC

c)Graduate

d)Post Graduate

3) Occupation
a)Salaried b)Self-Employed Prof. C)Business d) Retired
4) What is your income?
a) Below 10,000 pm
b) 10,000-30,000 pm
c) 31,000-50,000 pm
d) 50,000 and above.
5) What is the percentage that you save out of your income?
a)10%
b)15%
c) 20%
d) 25%
e) More

78

e) Professional

6) Do you Invest?
a) yes
b) no
7) Where have you invested?
a) Fixed Deposit
b) Saving Account
c) Recurring Deposit
d) Other Investment & Insurance Schemes.
8) What is your anticipated Investment time frame?
a) Long term - more than 7 years
b) Medium term - 4 to 7 years
c) Short-medium term - 1 to 3 years
d)Short term - less than 1 year
9) I am ready to take risk while investing as i know where there is risk , there are
returns also.
a)I strongly disagree
b)I disagree
c)I somewhat agree
d)I agree
e)I strongly agree
10)How would you rate your immediate family's overall financial situation?
a)Unstable - we have next to no savings.
b)Not very good - we have a fair amount of debt and little savings
c)Good - we have paid off most of our debts and are now saving quite regularly.
d)Very good - we have few debts and are quite secure.

79

11) Your key objective when considering an investment vehicle is?


a)Income only
b)Income and some Capital Growth
c)Balance of Capital Growth and Income
d)Capital Growth and some Income
e)Capital Growth Only
12) Which answer best describes your level of knowledge on investment and its
products?
a)High
b)Medium
c)Low
d)None
13)Priority in your life?
a)Life Insurance
b)Health Insurance
c)Investments
14) Do you have any insurance?
a)Yes
b)No
15) Do you know your Income Earning Capacity(IEC)?
a)Yes
b)No.
16) Does Your Insurance Covers Your IEC?
a)

Yes

b)

No.

80