A

PROJECT REPORT
ON

INVESTMENT OPTIONS OFFERED BY ICICI BANK AND HDFC BANK

SUBMITTED BY

AVANEET WASON

In partial fulfillment of the requirements for the degree of

Post Graduate Diploma in Management (PGDM)

(2008-2010)

UNDER THE GUIDANCE OF

Prof. RAJAN UMAP

SUBMITTED TO

JAYAWANY INSTITUTE OF BUSINESS STUDIES

TATHAWADE, PUNE -411033

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 ACKNOWLEDGEMENT

I am very thankful to Prof. RAJAN UMAP who is my faculty guide, for giving his
valuable suggestions and guiding me throughout the course of this project right from the stage of
dissertation proposal. He has been very patient in discussing the various aspects of the project
and has provided valuable guidance at different stages and discussed the modalities for the
survey, Data Analysis and the recommendations. His guidance during the analysis of the
different issues was also very helpful.

It gives me immense pleasure to thank all those who had helped me directly or indirectly
to complete this Dissertation Report.

AVANEET WASON

Enrollment No: JIBS/PGDM/2008-10/042

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 DECLARATION BY THE STUDENT

I do hereby declare that the project report titled COMPARATIVE STUDY ON

INVESTMENT OPTIONS OF ICICI BANK AND HDFC BANK has been prepared by me
under the guidance of Prof. (Mr.) Rajan Umap as part of my study in partial fulfillment of Post
Graduate Diploma in Management (PGDM) of JSPM’s Jayawant Institute of Business Studies,
Tathawade, Pune-33.

I further declare that this project report is the result of my own effort which is original
one and has not been submitted earlier either to this Institute or to any other
University/Institution for the fulfillment of the requirement of a course of study.

AVANEET WASON
EnrollmentNo
JIBS/PGDM/200810/044

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 CERTIFICATE FROM INTERNAL GUIDE

It is certified that the project entitled “A COMPARATIVE STUDY ON INVESTMENT

OPTIONS OF ICICI BANK & HDFC BANK is submitted in partial fulfillment of the
requirements for the award of degree of Post graduate diploma in management by Jayawant
Institute of Business Studies, Pune. This work has been done by AVANEET WASON, under my
supervision and is genuine.

Signature of Faculty

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 CHAPTERS

CHAPTER-1

 INTRODUCTION
 OBJECTIVES OF THE STUDY

CHAPTER-2

 ORGANIZATION PROFILE

CHAPTER-3

 LITERATURE REVIEW

CHATPER-4
 RESEARCH METHODOLOGY
 LIMITATIONS OF THE STUDY

CHAPTER-5
 DATA ANALYSIS AND INTERPRETATION

CHAPTER -6

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  FINDINGS &SUGESTIONS
 CONCLUSIONS
 SUGGESTION

EXECUTIVE SUMMARY

The project ,comparative study of investment options of ICICI BANK and hdfc bank was
conducted for the period of one month december 2009 to 20 th jan 2010.. This particular project
was a very good learning experience for me.

Banks lend money either for productive purposes to individuals, firms, corporate etc. or for
buying house property, cars and other consumer durable and for investment purposes to
individuals and others. However, banks do not finance and speculative activity. Lending is risk
taking. Having prudent norms for lending should cover the risk. The depositors of banks are also
assured of safety of their money by deploying some percentage of deposits in statutory reserves
like SLR and CRR.

With stiff competition and advancement of technology, the services provided by banks have
become more easy and convenient. The past days are witness to an hour wait before withdrawing
cash from accounts or a cheque from north of the country being cleared in one month in the
south.

Investment comes with the risk of the loss of the principal sum. The investment that has not been
thoroughly analyzed can be highly risky with respect to the investment owner because the
possibility of losing money is not within the owner's control. The difference between speculation
and investment can be subtle. It depends on the investment owner's mind whether the purpose is
for lending the resource to someone else for economic purpose or not.

In the case of investment, rather than store the good produced or its money equivalent, the
investor chooses to use that good either to create a durable consumer or producer good, or to lend
the original saved good to another in exchange for either interest or a share of the profits. In the
first case, the individual creates durable consumer goods, hoping the services from the good will

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make his life better. In the second, the individual becomes an entrepreneur using the resource to
produce goods and services for others in the hope of a profitable sale. The third case describes a
lender, and the fourth describes an investor in a share of the business. In each case, the consumer
obtains a durable asset or investment, and accounts for that asset by recording an equivalent
liability. As time passes, and both prices and interest rates change, the value of the

asset and liability also change.

With fixed investment policy and no contracting costs or taxes, the value ofthe firm is
independent of the structure of its liabilities [Modigliani and Miller (1958)]. This capital
structure irrelevance hypothesis implies that the function relating leverage and the value of the
firm is a horizontal line. Alternatively, if taxes or contracting costs are important, or if
investment policy and capital structure are interdependent, then the market value of the firm
depends on the structure of its liabilities. In the case of the capital structure relevance hypothesis,
the function relating firm value and leverage is concave.’ But neither hypothesis by itself
provides a satisfactory explanation of the estimates in table 1. Maximizing behavior by firms
implies that in voluntary transactions such as security sales, the firm should structure the
transaction to yield the highest possible value of the firm. Thus, if a transaction moves a
company along a given leverage-value function, the irrelevance hypothesis implies there
should be no abnormal returns associated with announcements of security sales, while the capital
structure relevance hypothesis implies the abnormal returns should be non-negative. Therefore,
the negative returns in table 1 are inconsistent with both predictions.

Reductions in firm value associated with apparently voluntary security sales present a puzzle. It
is possible that security sales are optimal responses to an adverse change in the firm’s prospects,
and the negative price reaction is due to the revelation of the adverse change. Even if a security
sale might itself increase the value of the firm, it could lead potential security holders to believe
the firm has received bad news. Without a theory capable of differentiating between movement
along a given leverage value function and a shift in the function, it is difficult to test hypotheses
about optimal capital structure by looking at the stock price reactions to announcements

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of security sales. Therefore, at the current stage of development, studies of financing decisions
provide relatively weak tests of optimal capital structure theories.

CHAPTER-1

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 Introduction Of The Topic

The topic of “ COMPARISION BETWEEN INVESTMENT OPTIONS OF ICICI AND

HDFC BANK: Banking is the backbone of a modern economy. Health of banking industry is one
of the most important pre-conditions for sustained economic progress of any country. The world
of banking has assumed a new dimension at the dawn of the 21st century with the advent of tech
banking, thereby lending the industry a stamp of universality. In general, banking may be
classified as retail and corporate banking. Retail banking, which is designed to meet the
requirements of individual customers and encourage their savings, includes payment of utility
bills, consumer loans, credit cards, checking account balances, ATMs, transferring funds
between accounts and the like. Corporate banking, on the other hand, caters to the needs of
corporate customers like bills discounting, opening letters of credit and managing cash.

The Indian banking scene has changed drastically with the private sector making inroads in an
area hitherto dominated by large public sector banks. Growing disinvestment is likely to impact
the banking industry as well. There is every possibility of privatization of public sector banks,
leading to greater operational autonomy.

The development of the Indian banking sector has been accompanied by the introduction of new
norms such as Income Recognition and Capital Adequacy, by the government. The latter implies
that banks can lend on the basis of their respective capital base. These norms have caused banks
to construct equity on their own, before going in for debt. Disintermediation is a real threat for
banks. Of late, banks are adopting the EVA (Economic Value Added) concept wherein revenues
are viewed in the context of the risk associated with them. The Indian banking market is growing
at an astonishing rate, with Assets expected to reach US$1 trillion by 2010. An expanding
economy, middle class, and technological innovations are all contributing to this
growth .The country’s middle class accounts for over 320 million people. In correlation with

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the growth of the economy, rising income levels, increased standard of living, and affordability
of banking products are promising factors for continued expansion.

Investment is the investing of money or capital in order to gain profitable returns, as interest,
income, or appreciation in value. It is related to saving or deferring consumption .Investment is
involved in many areas of the economy, such as business management and finance no matter for
households, firms, or governments. An investment involves the choice by an individual or an
organization such as a pension fund, after some analysis or thought, to place or lend money in a
vehicle, instrument or asset, such as property, commodity, stock, bond, financial derivatives (e.g.
futures or options), or the foreign asset denominated in foreign currency, that has certain level of
risk and provides the possibility of generating returns over a period of time.

Investment comes with the risk of the loss of the principal sum. The investment that has not been
thoroughly analyzed can be highly risky with respect to the investment owner because the
possibility of losing money is not within the owner's control. The difference between speculation
and investment can be subtle. It depends on the investment owner's mind whether the purpose is
for lending the resource to someone else for economic purpose or not.

In the case of investment, rather than store the good produced or its money equivalent, the
investor chooses to use that good either to create a durable consumer or producer good, or to lend
the original saved good to another in exchange for either interest or a share of the profits. In the
first case, the individual creates durable consumer goods, hoping the services from the good will
make his life better. In the second, the individual becomes an entrepreneur using the resource to
produce goods and services for others in the hope of a profitable sale. The third case describes a
lender, and the fourth describes an investor in a share of the business. In each case, the consumer
obtains a durable asset or investment, and accounts for that asset by recording an equivalent
liability. As time passes, and both prices and interest rates change, the value of the asset and
liability also change.

An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a

future return or interest from it. The word originates in the Latin "vest is", meaning garment, and
refers to the act of putting things (money or other claims to resources) into others' pockets. See

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Invest. The basic meaning of the term being an asset held to have some recurring or capital
gains. It is an asset that is expected to give returns without any work on the asset per se. The term
"investment" is used differently in economics and in finance. Economists refer to a real
investment (such as a machine or a house), while financial economists refer to a financial asset,
such as money that is put into a bank or the market, which may then be used to buy a real asset.

In finance

In finance, investment is the commitment of funds by buying securities or other monetary or

paper (financial) assets in the money markets or capital markets, or in fairly liquid real assets,
such as gold or collectibles. Valuation is the method for assessing whether a potential investment
is worth its price. Returns on investments will follow the risk-return spectrum.

Types of financial investments include shares, other equity investment, and bonds (including
bonds denominated in foreign currencies). These financial assets are then expected to provide
income or positive future cash flows, and may increase or decrease in value giving the investor
capital gains or losses.

Trades in contingent claims or derivative securities do not necessarily have future positive
expected cash flows, and so are not considered assets, or strictly speaking, securities or
investments. Nevertheless, since their cash flows are closely related to (or derived from) those of
specific securities, they are often studied as or treated as investments.

Investments are often made indirectly through intermediaries, such as banks, mutual funds,
pension funds, insurance companies, collective investment schemes, and investment clubs.
Though their legal and procedural details differ, an intermediary generally makes an investment
using money from many individuals, each of whom receives a claim on the intermediary.

Within personal finance, money used to purchase shares, put in a collective investment scheme
or used to buy any asset where there is an element of capital risk is deemed an investment.
Saving within personal finance refers to money put aside, normally on a regular basis. This
distinction is important, as investment risk can cause a capital loss when an investment is
realized, unlike saving(s) where the more limited risk is cash devaluing due to inflation.

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In many instances the terms saving and investment are used interchangeably, which confuses this
distinction. For example many deposit accounts are labeled as investment accounts by banks for
marketing purposes. Whether an asset is a saving(s) or an investment depends on where the
money is invested: if it is cash then it is savings, if its value can fluctuate then it is investment.

Common man needs money – Common man asks Bank – Bank gives money but asks his House
collateral(in return) – both agree on House’s value to be X and mortgage loan given based on
this amount – but mortgage loan has clause for adjustable interest rate – small introductory rate :
HUGE interests thereafter – common man looks at introductory rate and decided not an issue,
will be able to pay up – meanwhile Bank decides it needs good mechanism to manage money,
costs, investment etc – Bank chops up all mortgage payments from Common Man and sells to
other banks and investing firms as Investment opportunities – promising a percentage from
mortgage payments (called MBS) – Parties also interested since real estate thought to be a
golden investment (should Common main fail to pay up loan and lose house(foreclosure by
Common Man) ) – After first two years past introductory rates, interests payable by common
man sky rocket (inflation and other factors not helping) – common man unable to pay loan –
common man loses house :( – number of common men losing house tremendously increases –
suddenly all mortgage giving banks have lot of real estate without people to buy – banks have to
pay MBS investors something – selling of house does not seem possible – crux of problem
reached – in order to make sure their rears not sued to glory – mortgage giving banks file for
bankruptcy.

Gaining competitive advantage in the Investment Banking sector

The speed and scale of change in the investment banking industry is breathtaking. Increasingly
sophisticated clients require increasingly sophisticated services. That, combined with regulatory
regimes imposing ever more stringent compliance requirements, makes the industry one of the
most competitive.

So what determines success in the sector? Now more than ever the bank that achieves
competitive success will have:

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  the deepest understanding of the client’s needs,
 the greatest insight into the client’s market dynamics, and
 the clearest appreciation of the latest corporate and regulatory frameworks.

Ultimately it’s all about proposing the right deal to the right client at the right time. That may
sound very straight forward, but we know that the lead-up to that point involves a complex web
of long-term relationship building, deep market insight, and a thorough understanding of the
client.

TheBusinessProblem

The modern and successful investment bank is one that is truly able to:

 Leverage it’s collective client contacts and relationships

 Protect ownership, sensitivities and confidentialities
 Learn and understand the client’s specific business needs and objectives
 Develop, share and demonstrate deep market sector insight
 React and act quickly

Sadly very few investment banks have the modern systems or infrastructure in place to facilitate
this. Instead they typically rely on the periodic aggregation of fragmented and piecemeal
information from various sources such as back-office systems, spreadsheets, equity/analyst
research reports, email trails, powerpoint presentations, public sources such as the internet, and
subscription services such as D&B. All this results in wasted time, protracted decisions, lack of
collaborative knowledge sharing, and in the worst cases, lost deals.

TheBusinessSolution

Attunity InFocus allows individual investment bankers to be more proactive, productive and

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efficient in serving their client’s needs. It dramatically increases their effectiveness, ability to
identify issues and resolve them by:

1.Developing and managing contacts. Leveraging the banks collective contact relationships
within the client, whilst protecting ownership, sensitivities and confidentialities of those
contacts.
2.Focusing on the client. Bringing together all the relevant contextual information about a
client, from external and internal sources, in real-time.
3.Sharing collective knowledge. Collaboratively reviewing, discussing and sharing
experiences, market information, models and analytics pertinent to the client.

The Indian banking Industry is in the middle of an IT revolution, Focusing on the

expansion of retail and rural banking. Players are becoming increasingly customer -
centric in their approach, which has resulted in innovative methods of offering new banking
products and services. Banks are now realizing the importance of being a big player
and are beginning to focus their attention on mergers and acquisitions to take advantage
of economies of scale and/or comply with Basel II regulation.“Indian banking industry
assets are expected to reach US$1 trillion by 2010 and are poised to receive a greater infusion
of foreign capital,” says Prathima Rajan, analyst in Celent's banking group and author of the

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report.“The banking industry should focus on having a small number of large players that can
compete globally rather than having a large number of fragmented players."

Objectives of the study

 To study of market share in banking sector of ICICI and HDFC.

 To study the consumer satisfaction with ICICI and HDFC.

 To know about the position of ICICI bank in market.

 To analyze the decision making process of the consumers.

 To know about company history and organization structure.

 Provide an overview of investment options of HDFC bank. & ICICI bank.

 To make a comparative performance of unit linked plans

 To study the expectations of customers from banking companies.
 Position of banking Companies in the mind of the consumer

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CHAPTER-2

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 Organazation profile

ICICI BANK

ICICI Bank is India's second-largest bank with total assets of about Rs. 1 trillion and a network
of about 540 branches and offices and over 1,000 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-Banking , venture capital, asset management and information technology.
ICICI Bank's equity shares are listed in India on stock exchanges at Chennai, Muzaffarnagar,
Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India
Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock
Exchange (NYSE).
Corporate Profile

ICICI Bank is India's second-largest bank with total assets of Rs. 3,997.95 billion (US$ 100
billion) as on March 31, 2008.

Board of Directors

ICICI Bank's Board members include eminent individuals with a wealth of experience in
international business, management consulting, banking and financial

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 Corporate Social Responsibility

ICICI Bank is deeply engaged in human and economic development at the national level. The
Bank works closely with ICICI Foundation across diverse sectors and programs.

Investment Products Of Icici Bank

At ICICI Bank, we care about all your needs. 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 Bonds

 All ICICI Bank Bonds have been rated "AAA" by CARE and "LAAA" by ICRA
indicating the highest degree of safety for your money.
 All Investment in ICICI Bank Tax Saving Bonds issued upto March 2005 are eligible for
tax rebate under Sec 88 to the full extent possible.
 Bonds are listed on BSE, NSE.

GOI Bonds

8% Savings Bonds (Taxable), 2003

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

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Mutual Funds-

Mutual Funds Investments Through ICICI Bank

ICICI Bank Mutual Funds services aim at helping you design the ideal portfolio for your
investment requirements. At ICICI Bank, we help you identify the appropriate mix of Mutual
Fund schemes on the basis of asset allocation strategies. Invest in various schemes of multiple
mutual funds with a satisfactory performance record and reap the benefits. Additionally, ICICI
Bank Mutual Funds services also equips you with various research reports to help you make an
informed decision.

IPO

Invest in IPOs Online

You can invest in IPOs online through www.icicidirect.com with same convenience of investing
in equities - hassle-free and with zero paper work. Also, get in-depth analyses of new IPOs issues
(Initial Public Offerings) which are about to hit the market. IPO calendar, recent IPO listings,
prospectus/offer documents and live prices will help you keep on top of the IPO markets.

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.

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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 2.5g, 5g, 8g, 20g and 50g categories, subsequently other
denominations will also be introduced.

ICICI Bank Pure Gold is available through select branches of ICICI Bank*.

*ICICI Bank Pure Gold is not available through ICICI Bank ATM's.

Forex Services

The next time when you travel abroad for business or for leisure, relax, let ICICI Bank's Foreign
Exchange Services take care of your foreign exchange requirement. 

ICICI Bank's Foreign Exchange Services will help you organise your foreign exchange in the
most hassle free manner. Whether its Foreign Currency, Travellers Cheques or Travel Card,
ICICI Bank Foreign Exchange Services is a one-stop solution to your foreign exchange
requirement

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 Company profile

HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in
the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The
bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled
Commercial Bank in January 1995.

HDFC is India's premier housing finance company and enjoys an impeccable track record
in India as well as in international markets. Since its inception in 1977, the Corporation
has maintained a consistent and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has
developed significant expertise in retail mortgage loans to different market segments and also
has a large corporate client base for its housing related credit facilities. With its
experience in the financial markets, a strong market reputation, large shareholder base and

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unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian
environment.

HDFC Bank began operations in 1995 with a simple mission : to be a “ World Class Indian
Bank.” We realized that only a single minded focus on product quality and service
excellence would help us get there. Today, we are proud to say that we are well on our
way towards that goal.

March 2006 March 2007 March 2008

Citied 228 316 327

Branches 535 684 761

ATMs 1323 1605 1977

Investment Options Of Hdfc Bank-

1) Mutual funds

Mutual funds are funds that pool the money of several investors to invest in equity or debt
markets. Mutual Funds could be Equity funds, Debt funds or balanced funds. Funds are selected
on quantitative parameters like volatality, FAMA Model, risk adjusted returns, rolling return
coupled with a qualitative analysis of fund performance and investment styles through regular
interactions / due diligence processes with fund managers.

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2) Bonds
Just as people need money, so do companies and governments. A company needs funds to
expand into new markets, while governments need money for everything from infrastructure to
social programs. The problem large organizations run into is that they typically need far more
money than the average bank can provide. The solution is to raise money by issuing bonds (or
other debt instruments) to a public market. Thousands of investors then each lend a portion of the
capital needed. A bond is nothing more than a loan for which you are the lender. The
organization that sells a bond is known as the issuer. You can think of a bond as an IOU given by
a borrower (the issuer) to a lender (the investor).

3) HLV calculater

 This is the money you spend on yourself & towards taxation    

 Anything that can be  converted into cash in the next 7 days can be termed as a liquid
asset e.g. Cash, FD, Bank Savings, MFs, Shares etc
 This is the amount outstanding against you e.g. housing loan, personal loan, credit card
outstanding etc. 

4) IPO-
HDFC Bank presents Mudra, an offering worth its weight in gold. Mudra is a 24 Carat,
99.99% pure gold bar that you can purchase for investment or gifting.
Gold continues to be one asset that appreciates steadily. HDFC Bank now offers Pure Gold bars
imported from Switzerland with an Assay certification, signifying the highest level of purity as
per international standards.

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CHAPTER-3

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 LITERATURE REVIEW

1) Pricing of Initial Public Offers

An Analysis of Corporate Practices and Investors’ Preferences

Pricing of an IPO is based on the price discovery method. Book-building is recommended as a

price discovery method using the price band on the basis of real demand for the securities. It is
the investors who determine the price. This process attempts to eliminate the over pricing of
securities. The era of free pricing of securities has offered advantages to companies and
investors. However, a common opinion prevails that book-building method followed by the
corporate has not yet got a wide acceptance in the Indian context. Investors’ perceptions about
corporate practices help issuers to make proper decision in pricing of securities.

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Regulatory Framework of Pricing

Pricing of capital is important in the sense that it has bearing on the efficiency of the capital
market to allocate resources for the productive needs of the society. By efficiency it is meant
that new information is widely, quickly and cheaply available to investors that this information
includes what is knowable and relevant for judging securities and that is rapidly reflected
inequity prices (Aggarwal, 1997). Pricing of IPOs is the process of fixing price of new issues.
Before 1947, there was no regulation to monitor the pricing of the securities. The companies
were not required to take any approval from the authorities regarding timing, quantum and
pricing of securities. The ‘Capital Issues [Control] Act 1947’ was passed to control the public
issue
made by the companies and to protect the investors’ interests. According to this Act, companies
were required to take prior approval from the Controller of Capital Issues for mobilizing funds
in the primary market.
The important highlights of this Act are as follows:

1. Decisions regarding timing, quantum and pricing of issues were taken by the Controller of
Capital Issue and not by the company promoters.
2. New company could not issue its securities at premium or at discount.
3. Such of those existing companies which have a good track record of reserves can issue shares
at premium.
4. The ICCI Act prescribed formula to calculate premium based on two criteria viz. net assets
value and profit earning capability value (Bharathi,2004). Net assets value (NAV) is calculated
as equity capital plus free.
Author- M. R. SHOLLAPUR AND M. U. SUNAGAR
www.ecocomm.anu.edu.au

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2) Productivity-based Comparative Analysis of
Public, Private and Foreign Banks

Introduction
Indian policymakers at the national level deliberately shifted for a series of economic reforms in
the wake of a serious balance-of-payments crisis in1991. To start with the reforms process, the
central plank was to carry out reforms in the financial sector with the banking being the mainstay
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of financial intermediation. The objective of the banking sector reforms was to promote a
diversified, efficient and competitive banking and financial system with the ultimate objective of
improving the allocative competence of resources through operational flexibility, improved
economic viability, institutional strengthening and superior level of productivity.

In order to meet the real challenge of value creation in corporate world, we need to make the
employees quite productive and need to relate their compensation with goals achievement level,
which would yield the overall productivity in place in such organization. Tying people’s
compensation and incentives to a company’s value creation metrics would take the organization
to different state of growth in that industry. On the other hand waiting too long to tie
performance measures to compensation and incentives tends to cause people to drag
their feet. They’re still being evaluated under the old compensation criteria so they don’t really
have much motivation to change the way they do their jobs. However, people will adhere to the
new set of metrics and show improved productivity if they’re certain that the new compensation
or incentive system will be in place soon.
It does not mean that everyone involved in the process works harder but rather that they must
work smarter so as to achieve a better utilization of all other resources. Analysis shows that
average per capita annual emoluments of SBI are Rs0.31 million and that of ICICI bank are 0.36
million but ACGR for these banks for the period 2001-06 are 11.06 and 22.92 percent. There are
so many other differences between earning per employee, business per employee and profit per
employee of banks. But is there any relation between the serising earnings of employees and
business and profits of banks. Therefore, and productivity of bank employees is surely a topic to
be researched.
Author -KARAM PAL AND PUJA GOYAL
http://wwwwds.worldbank.org

3) Performance Evaluation of selected

Indian Mutual Fund Schemes

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;

This paper evaluates the performance of selected mutual fund schemes in the framework of risk
and return during the period April, 2000 to March 2005.The performance of measures used are
Sharpe ratio, Treynor ratio, Jensen measure, Sharpe differential return measure and fama’ s
components of performance. The results indicate Failure of many selected schemes
outperforming the market, low average beta, disproportionate un systematic risk, miss-match of
the risk and return relationship in some schemes, failure of some schemes in generating
mandated return and negative net selectivity in more number of schemes. These can be mainly
attributed to the lack of professional management skills in security analysis and consequent poor
stock selection, inadequate diversification on the one hand and highly conservative approach in
constructing portfolios when market conditions demand aggressive portfolios on the other hand.

The mutual fund industry is a fast growing sector of the Indian capital and financial markets.
They have become major vehicle for mobilization of savings, especially from the small and
household savers for investment in the capital market. Mutual funds entered the Indian capital
market in 1964 with a view to provide the retail investors the benefit of diversification of risk,
assure d returns, professional management. Since then they have grown phenomenally in terms
of number, size of operations, investors’ base and scope. The liberalization, privatization and
globalization measures undertaken by the Government of India opened the way for the entry of
private sector and foreign players into this industry. Consequently, this has emerged as a highly
competitive financial service industry today. In India the mutual fund industry had its origin with
the establishment of Unit Trust of India in 1964. Public Sector banks and financial institutions
began to establish mutual funds in 1987. The private sector and foreign institutions were allowed
to set up mutual funds in 1993. Mutual funds have all come forward with a varying schemes
suitable to the need of saving populace.
This paper analyzed the performance of the selected mutual fund schemes by using the leading
performance measures like Sharpe, Treynor, Jensen and Sharpe differential return. Further, the
overall performance of these schemes has been analyzed by decomposing their performance into
various components as per Fama’ s measure. The monthly net asset values of 60mutual fund
schemes for the five years period i.e., from April 2000 to March2005 are used to calculate the

Page 29
rate of return of selected schemes, which are compared with the market return represented by
BSE Sensex, and risk free rate of return represented by 91-days Treasury Bills.

The empirical results reported here indicated failure of many selected scheme sin outperforming
the market, low average beta, disproportionate unsystematic risk, miss-match of the risk and
return relationship in some schemes, failure of some schemes are the other significant
observation in the study. These can be mainly attributed to the lack of professional management
skills in
security analysis and consequent poor stock selection, inadequate diversification on the one hand
and highly conservative approach in constructing portfolios when market conditions demand
aggressive portfolio son the other hand. Hence, the managers of the schemes have to redesign
and change the investment pattern by identifying the likely phases in the market (bullish/
bearish) well in advance and emerging stocks on a continuous basis. This requires rigorous
equity research on the part of mutual funds. In other words, they have to adopt an active
approach to
portfolio construction rather than a passive approach

Author- b. Phaniswara Raju and k. Mallikarjuna rao

www.management-rating.com

4) SBI CUTS HOME LOAN RATES FOR FIRST 3 YEARS

State Bank of India has launched two special home loan schemes that assure low interest rates in
the first three years, upping the ante for its rivals in the market which has turned bullish
HDFC has said it will take a view after the Budget, which is only days away. ICICI Bank said it
has reduced interest rates in line with the movement of systemic rates and deposit costs since
December `08. “We believe that the home loan segment has robust potential and we would
continue to focus on this segment,” said an ICICI Bank spokesperson. LIC Housing Finance—
the second-largest mortgage finance company—has also reduced home loans .
The intensity of the competition between SBI and HDFC is evident from claims and counter-

Page 30
claims from both sides on the superiority of their product. “Even if the borrower gets a better
deal for the first three years, his payment over the remaining tenure of the loan will be lower
under an HDFC loan,” said HDFC joint MD Renu Karnad. The institution’s chairman, Deepak
Parekh, had recently announced a possibility of lending rates coming down if there is a decline
in cost of funds.
According to Ms Karnad, there has been a remarkable pickup in home sales. “We are seeing this
because of a real reduction in property prices. Builders like Unitech and Lodha have brought
down rates in Delhi and Mumbai and are seeing growth in sales.” She added that the pickup in
sales was so sturdy that prices have started picking up again—a perception echoed by SBI.
“There is a definite pickup in home purchases partly driven by a fall in cost of loans and real fall
in property prices. There are pockets where the resurgence is so good that property prices have
started picking up; it has come a full circle quickly,” said an SBI official .
The official said rates have bottomed out and there is a possibility that they may go up
marginally in the medium term. The official added that the bank has lent up to Rs 7,171 crore
till the end of May `09 under the special scheme that offers loans at 8% for the first year. This is
a sizeable number considering that disbursements during the whole of FY09 was Rs 9,372
crore. SBI has home loan portfolio of over Rs 56,000 crore.

“There is a concern among borrowers that a rise in rates will increase their liabilities. We are
telling them that their EMIs are frozen for the next 36 months,” she said.
SBI has introduced two new products—SBI Easy Loan for amounts up to Rs 30 lakh and SBI
Advantage Home Loan for loans above Rs 30 lakh. Under both these schemes, the interest would
be applied at a special rate of 8% for the first year. Under SBI Easy, interest rates for the second
and third years are fixed at 9%. From the fourth year, the customer can choose between a floating
rate of 2% below the State Bank Advance Rate (SBAR) and a fixed rate of 1% below SBAR with
a five-year reset. SBAR is the bank benchmark rate ..
Under SBI Advantage, the interest rate is fixed at 9.5% per annum for the second and third years.
From the fourth year, the customer can choose between a floating rate of 1% below SBAR and a
fixed rate of 0.5% below SBAR with a five-year reset. At present, both ICICI Bank and HDFC
charge 9.25% for loans up to Rs 30 lakh.

Page 31
The 8% special rate was introduced by SBI in February 2009. This scheme was brought out by
SBI as an adjunct to an industry-wide special home loan scheme introduced by the Indian Banks’
Association at the behest of the government as part of its stimulus package. Although the scheme
ends on Tuesday, many bankers feel a new scheme could be announced.

Author-santosh sabarwal

http://www.articlealley.com/article_974627_33.html

5) Investment Banking Analyst: Meeting Investment Concern With Chances

The aspect of investment banking gives the opportunity for business entities and economic
enthusiast to gain additional investment funds for their respective economic interest of growth and
profit. Generally, the investment banking aspect operates in a system wherein interested parties
can participate and gain in the profitable condition of other business entities thus promoting
additional investment for their growth. This relationship in the field of investment banking creates
a mutual benefit for both parties.

In the aspect though of matching the two points involved in the field of investment banking, it is
important to know first the two ends involved in the said economic field namely the desiring
investor with the financial resources and the profitable opportunities either through buying stock
shares or selling them in the market. For this interest, both of the said parties involved in this

Page 32
economic system turn towards the presence of the investment banking analyst to realize and put
.
Generally, investment banking analysts perform as both the primary information source and the
middlemen for each investment banking operation and transaction. Because they are the party that
maintain the profitable conditions and transaction in this economic field, their presence serves as
the link for cyclical behavior of the investment banking field. Due to this significance, it is
important to seek out their services and assistance prior to engaging in an agreement

For the desiring investor, the services of investment banking analysts serve as the primary
manifestation of their profit interest because this is the party that actually searches possible and
effective options towards the said concern. Generally, the participants in this party help the
investor in finding profitable opportunities in the market through significant recommendations
and analysis outlook about the potential outlook of the economy and the performance of the
targeted organizations.

Their significance is generally directed towards both aspect of selling and buying shares and
stocks with business organizations or with other investors in the field depending upon the mutual
agreement and desire of both parties. On the other side, investment banking analysts are also the
one recruiting possible investors for the business entities aiming to outsource additional financial
resources for their business operation more often for expansion concern.

Indeed, with this significance of the analyst in the said economic field, more and more people are
becoming attracted towards investment banking careers to take part in the profitable payoffs of
this job for their personal financial concern. In general, when equip with profit interest and
financial investment resources, .

Author: Larry Y. Hodge

Page 33
6) SBI CUTS HOME LOAN RATES FOR FIRST 3 YEARS

State Bank of India has launched two special home loan schemes that assure low interest rates in
the first three years, upping the ante for its rivals in the market which has turned bullish
following a pickup.
HDFC has said it will take a view after the Budget, which is only days away. ICICI Bank said it
has reduced interest rates in line with the movement of systemic rates and deposit costs since
December `08. “We believe that the home loan segment has robust potential and we would
continue to focus on this segment,” said an ICICI Bank spokesperson. LIC Housing Finance—
the second-largest mortgage finance company—has also reduced home loans for existing
borrowers by 50 basis points.
The intensity of the competition between SBI and HDFC is evident from claims and counter-
claims from both sides on the superiority of their product. “Even if the borrower gets a better
deal for the first three years, his payment over the remaining tenure of the loan will be lower
under an HDFC loan,” said HDFC joint MD Renu Karnad. The institution’s chairman, Deepak
Parekh, had recently announced a possibility of lending rates coming down if there is a decline
in cost of funds.
According to Ms Karnad, there has been a remarkable pickup in home sales. “We are seeing this
because of a real reduction in property prices. Builders like Unitech and Lodha have brought
down rates in Delhi and Mumbai and are seeing growth in sales.” She added that the pickup in
sales was so sturdy that prices have started picking up again—a perception echoed by SBI.

Page 34
“There is a definite pickup in home purchases partly driven by a fall in cost of loans and real fall
in property prices. There are pockets where the resurgence is so good that property prices have
started picking up; it has come a full circle quickly,” said an SBI official who did not wish to be
named.
The official said rates have bottomed out and there is a possibility that they may go up
marginally in the medium term. The official added that the bank has lent up to Rs 7,171 crore
till the end of May `09 under the special scheme that offers loans at 8% for the first year. This is
a sizeable number considering that disbursements during the whole of FY09 was Rs 9,372
crore. SBI has home loan portfolio of over Rs 56,000 crore.

“There is a concern among borrowers that a rise in rates will increase their liabilities. We are
telling them that their EMIs are frozen for the next 36 months,” she said.
SBI has introduced two new products—SBI Easy Loan for amounts up to Rs 30 lakh and SBI
Advantage Home Loan for loans above Rs 30 lakh. Under both these schemes, the interest would
be applied at a special rate of 8% for the first year. Under SBI Easy, interest rates for the second
and third years are fixed at 9%. From the fourth year, the customer can choose between a floating
rate of 2% below the State Bank Advance Rate (SBAR) and a fixed rate of 1% below SBAR with
a five-year reset. SBAR is the bank benchmark rate to which all floating rate loans are pegged.
Under SBI Advantage, the interest rate is fixed at 9.5% per annum for the second and third years.
From the fourth year, the customer can choose between a floating rate of 1% below SBAR and a
fixed rate of 0.5% below SBAR with a five-year reset. At present, both ICICI Bank and HDFC
charge 9.25% for loans up to Rs 30 lakh. For loans above Rs 30 lakh, HDFC charges 9.75% and
ICICI10-11%.
The 8% special rate was introduced by SBI in February 2009. This scheme was brought out by
SBI as an adjunct to an industry-wide special home loan scheme introduced by the Indian Banks’
Association at the behest of the government as part of its stimulus package. Although the scheme
ends on Tuesday, many bankers feel a new scheme could be announced.

Author-santosh sabarwal

http://www.articlealley.com/article_974627_33.html

Page 35
7) Investment Banking Analyst: Meeting Investment Concern With Chances

The aspect of investment banking gives the opportunity for business entities and economic
enthusiast to gain additional investment funds for their respective economic interest of growth and
profit. Generally, the investment banking aspect operates in a system wherein interested parties
can participate and gain in the profitable condition of other business entities thus promoting
additional investment for their growth. This relationship in the field of investment banking creates
a mutual benefit for both parties giving them respectively their desired profits.

In the aspect though of matching the two points involved in the field of investment banking, it is
important to know first the two ends involved in the said economic field namely the desiring
investor with the financial resources and the profitable opportunities either through buying stock
shares or selling them in the market. For this interest, both of the said parties involved in this
economic system turn towards the presence of the investment banking analyst to realize and put
in.

Generally, investment banking analysts perform as both the primary information source and the
middlemen for each investment banking operation and transaction. Because they are the party that
maintain the profitable conditions and transaction in this economic field, their presence serves as

Page 36
the link for cyclical behavior of the investment banking field. Due to this significance, it is
important to seek out their services and assistance prior to engaging in an agreement or
transaction.

For the desiring investor, the services of investment banking analysts serve as the primary
manifestation of their profit interest because this is the party that actually searches possible and
effective options towards the said concern. Generally, the participants in this party help the
investor in finding profitable opportunities in the market through significant recommendations
and analysis outlook about the potential outlook of the economy and the performance of the
targeted organizations.

Their significance is generally directed towards both aspect of selling and buying shares and
stocks with business organizations or with other investors in the field depending upon the mutual
agreement and desire of both parties. On the other side, investment banking analysts are also the
one recruiting possible investors for the business entities aiming to outsource additional financial
resources for their business operation more often for expansion concern.

Indeed, with this significance of the analyst in the said economic field, more and more people are
becoming attracted towards investment banking careers to take part in the profitable payoffs of
this job for their personal financial concern. In general, when equip with profit interest and
financial investment resources, remember to consult with an investment banking analyst

Author: Larry Y. Hodge

WWW.article alley.com-972467.htt.32

Page 37
8) A Guide To Investment Bank Ranking

9) How to choose the best bank

After some dreaded experiences with banks, have you chosen to keep your cash in the piggy
bank? Invariably, people are unable to find the right bank that can offer services to their
satisfaction. When you find out the kind of banking service you require then it becomes easy for
You to find a bank for yourself.
.
After pondering about all the good and bad experiences with banks, I think, at first, it is best to
know what you want the bank to do with your cash. You must know your banking behavior. Ask
questions to yourself- whether you would like to deposit periodically and grow the money or
you would transact frequently , whether you want international banking or local banking. You
should have a clear idea because you need to explain the banker.

Banking requires some of your time and patience. You must look for a bank that is open for
services when you can manage being there. If you desire to access Internet banking then look for
a bank that helps you to carry out transactions rapidly and professionally through Internet.

Banks typically claim that for every one dollar they have in assets, they like to lend out 60 cents
and keep 20 cents in cash and 20 cents in secondary reserves, which can be made liquid in one

Page 38
or two days. Find out from the bank, that you are visiting, as to how they check out on these
ratios.

Another determination in selecting a bank is the fees. The competition for your money can be
fierce and many banks will offer very low or no fee accounts. Still, there can be other hidden
fees to watch out for. Always ask a potential bank what they charge for ATM, Live Teller use,
checks, over drafts, stop payments, canceled checks, statements and balance inquiries, interest
rates , minimum balances etc. You must compare these fees and other services with other banks.

You must also forecast how you want to use the bank in future. Many banks offer special rates
for car loans, mortgages and financial planning. If you have any such prospects then you mus
Talk about these particulars also with the bankers.
Bank shopping can prove to be very advantageous in the future. After you have been connected
with a bank for many years, the bank would easily lend you cash, provide good reference to a
mortgagor, and keep offering you various services. Switching banks is not a good idea, as you
will forfeit these benefits by doing so. By having patience and doing your homework, you might
The bank that is perfect for you.

Author: Anne Mitsu

http://www.articlealley.com/article_1376927_19.html

Page 39
10) Impact of Financial Services Act on Investment Products

The implementation of the Financial Services Act 1986 has forced retailers of investment
products to become tied to a single insurance company or to act as an independent by selecting
the best product for the customer from the entire market. As a result of this many retailers of
investment products have become tied to single insurance companies leading to a significant
change in the relationship between the manufacturers and retailers of financial products. In
addition there has been a sharp reduction in the levels of business transacted through the
independent channel and the availability of independent financial advice. This has affected
manufacturers in different ways depending upon their existing sources and mix of business. In
the longer term this is likely to lead to a reduction in the number of life offices and the more
rapid creation of financial conglomerates based upon the top ten banks and building societies. 

Author-David w Shelton

http://www.emeraldinsight.com/10.1108/02652329010139601

Page 40
11) Investment in internet banking as a real option: theory and
tests
. 

This paper examines the optimal exercise of strategic real options to invest in Internet
banking (IB) technology within a two-stage game, parameterized by the distribution of bank
size and uncertainty over the profitability of investment, and empirically tests the results. The
value of the strategic investment option to a strategically significant entrant into IB depends
on both expected future profits as well as the variance of those profits. Expected profits to an
entrant depend, in equilibrium, on its size, as measured by existing market share
(concentration) or total assets, relative to its rivals. Conditional on the degree of uncertainty,
larger banks should, as a consequence, exercise their options earlier than smaller banks, for
purely strategic advantages, and act as market leaders in the provision of IB services. Like
ordinary options, however, the value of the strategic investment option to both large and
small banks increases in uncertainty, implying that early exercise will be more likely the
more information is available about potential demand. We test these hypotheses on
investment in IB services with data from a sample of 1618 commercial banks in the tenth
Federal Reserve District during 1999. Consistent with our hypotheses, relative bank size, as
measured by measures of concentration, and demographic information predictive of future
demand both positively influence the probability of entry into IB in our sample.

Recently, banks have found themselves facing more aggressive competition, uncertainty and
unlimited opportunities. No bank can offer all products/services and be the best/leading bank
for all customers. They are forced to find a new basis for competition. A bank must examine
its strengths and opportunities and take a competitive position in the competitive
marketplace. Discusses some strategic issues related to bank positioning. A number of ways
in which distinctive positions can be developed and maintained have been identified. A well-
integrated application of technology and staff through operations that respond to customer
needs encourage customers to use a whole range of banking products/services rather than just

Page 41
a few. It also helps to build loyalty by creating deeper and fuller customer relationships.
Surveys how a bank has been selected and perceived from the point of view of its customers
in relation to its competitors in that marketplace. Reveals that in Sweden, there is no single
leading bank in all financial areas, but there are a number of leaders: a leader in terms of
deposit base, a leader in terms of loans outstanding base, a largest bank in terms of assets,
and a niche leader bank. Shows that functional quality is a more important factor than
traditional marketing activities. As expected, convenience of location, price and advertising
had a minor impact on bank selection.

Author –john k kennedy

www.articlealley .com-923345.htt.34

Page 42
12) Leading Through Customer Service : The ICICI
Bank Way

In the age of fast changing market dynamics in the banking industry, sticking the neck out has
become more and more complex. It had been more complex for a private bank as there are a lots
of support provided to public sector bank. ICICI Bank has been one that found the way out and
key was with the customers of the bank. The bank pursued the policy of keeping the customer
happy and in a very short period of time, it became second largest bank of the country. The bank
is a role model for many of the new banks. The present paper attempts to elaborate the customer
centric initiatives taken by ICICI Bank which made it leader in Indian banking space and is
taking the bank to places.
The forces of globalization, liberalization and technology are fundamentally changing the global
economic order. Technological advances have resulted in the death of distance,
time and location and liberalization and globalization have led to reduce barriers to entry, shorter
strategy and product cycles, commoditization of products and increased competition.
These factors have impacted financial services market considerably and coupled with the rapid
evolution of the electronic world have led to easier production and global distribution of
all financial services. The Indian financial sector is impacted by these developments. The
financial sector reforms over the past decade“ was later changed to “ICICI Limited” .ICICI
Bank has been leading from the front. Once development financial institution is today offering 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, merchant banking, commercial banking, life and non-life insurance, venture

Page 43
capital, asset management and information technology. ICICI Bank is India’s second-largest
bank with total assets of over Rs. 1 trillion and a network of about 540 branches
and offices and over 2,000 ATMs and largest call center with 1700 seats.
As a part of its endeavour of being the change leader, the bank introduced several new things for
the first time. To name few are as follows:
􀁺 ICICI was the first intermediary to move away from single prime rate to three-tier prime rates
structure and introduced yield curve based pricing.

􀁺 ICICI became the first Indian Company in Indian Financial sector to raise GDR.

􀁺 ICICI becomes the first Indian Company to list on the NYSE through an issue of American
Depositary Shares.

By –aparna iyer
http://www.buzzle.com/articles/best-investment-options.html

Page 44
13)   Customer Orientation in Designing Mutual Fund Products: An
Analytical Approach to Indian Market Preferences
The significant outcome of the government policy of liberalisation in industrial
and financial sector has been the development of new financial instruments. These
new instruments are expected to impart greater competitiveness flexibility and
efficiency to the financial sector. Growth and development of various mutual fund
products in Indian capital market has proved to be one of the most catalytic
instruments in generating momentous investment growth in the capital market.
There is a substantial growth in the mutual fund market due to a high level of
precision in the design and marketing of variety of mutual fund products by banks
and other financial institution providing growth, liquidity and return. In this
context, prioritization, preference building and close monitoring of mutual funds
are essentials for fund managers to make this the strongest and most preferred
instrument in Indian capital market for the coming years. With the decline in the
bank interest rates, frequent fluct...
Description:  Scholarly Article of Dr. Tapan K Panda and Dr. Nalini Prava Tripathy

URI:  http://hdl.handle.net/2259/198

Page 45
 14)Best investment options

The following investment options may help people settle on the best investment. Options should
be carefully evaluated, keeping in mind the pros and cons of the same

A multitude of investment options are available to people who would like to ensure that their
money multiplies at a faster rate, as compared to the rate at which it would accrue interest, if
deposited in a savings account. People may choose to invest actively in the market or earn
residual and leveraged income through passive means. While reading this article on best
investment options, one must bear in mind that investments should be examined on the basis of
the investment objectives and the degree of risk and uncertainty involved. Since risk and return
are directly proportional, best investing options for risk-averse and risk tolerant individuals will
differ. Even people sharing the same level of risk tolerance may find that adopting a different
approach than what works for their counterparts, may help them achieve their specific
investment objective. Know more on passive income opportunities.
Whats are the best investment options?

Investments for risk averse individuals

In the present market, Treasury Inflation Protected Securities (TIPS), may be the best investment
for risk averse individuals, since these are backed by the full-faith of the US govt. Moreover, the
bondholder has the option of investing in bonds with maturities of 5, 10 or 30 years. The investor
is guaranteed a fixed rate of interest semi-annually and on maturity, the bondholder is paid the
inflation adjusted principal. Read more on best investments .during inflation Risk averse
individuals, who would like to invest for short periods of time, have the option of purchasing a
fixed rate CD for a period of six months, one year, five years or more. A CD or a Certificate of
Deposit offers a rate of interest that is higher than the rate of interest than one can hope to earn
on a savings account deposit. The safety of the money is guaranteed, since deposits of up to
$250,000 are insured by the FDIC (Federal Deposit Insurance Corporation). However, there are a

Page 46
couple of disadvantages when it comes to a CD. Since, the rate of interest is fixed, the return on
investment may be less on account of inflation. Moreover, the money cannot be withdrawn
before the maturity period ends else, the consumer would have to pay a penalty. .

A money market account (MMA) allows one to close the account, as and when desired and
withdraw money 3-5 times a month, using a check. The rate of interest on an MMA is slightly
less than that on a CD, but at least double that of a savings account. However, inflation is still a
source of concern. In the absence of inflation, MMAs could have qualified as one of the best
short term investment options. However, in the current scenario, TIPS are ideal investments.
Interested readers may refer to the article titled, 'How does a Money Market Account Work'.

Fixed income mutual funds may not be a smart idea in the current market and generally, fixed
income annuities do not provide inflation adjusted income. However, a few fixed income
Annuities include the inflation rider, but at a higher cost.

Investments for people with above risk tolerance.

.
Apartment REITs (Real Estate Investment Trusts) may not be a bad idea given the slump in the
housing market. However, one must remember that these are not always safe. This is because
they invest in real estate and the real estate market, as we all know, can really hit rock bottom.
Apartment REITs are a good idea in a market where people are reluctant to buy houses and are
willing to shell out the money for rent. However, with unemployment at an all time high, it's
believed that a number of people are choosing to double up. This will result in fall of the demand
for rental property. If the demand for rental properties falls, rent will fall and the investor's
returns in the form of dividends will also fall. Thus, apartment real estate investment trusts are
Ideal for people who have an appetite for risk.

In the current scenario, investing in the stock market may not be advisable. In a bull market,
people who have an appetite for risk, can invest in the stock market and consider options trading.
For additional information, one may refer to articles on stock investing and options trading.
Commodity trading is preferred when the stock market is not going great guns. This is because

Page 47
the correlation between the stock and the commodities market is negative. However, in the recent
months, there has been a sharp increase in the correlation between the commodity and stock
markets. Nevertheless, the claim that commodities do well in times of inflation cannot be
disputed. Hence, people who have an appetite for risk should invest in commodities.

Gold is one of the best investment options when the US dollar is weak. For instance, on Nov 9,
when the US dollar was at its 15-month low, gold prices surged from $1,108.40 to $1,123.40.
Assuming that this trend will continue till the US economy is on a firm footing, investors are
encouraged to invest in Gold ETFs (exchange traded funds). Since these are relatively safe, even
investors who are risk averse can dabble in Gold ETFs.

By –Aparna iyer
http://www.buzzle.com/articles/best-investment-options.html

Page 48
15)Best investments for 2010

What are the best investments for 2010? Is this question leaving you clueless ?If yes, then go
through some of the fine 2010 investment strategies mentioned in this article

These days, many investors are totally confused as of where to invest their hard earned money,
so that they get good returns on their investments. Most of the investors fear about losing their
money in risky investment options due to the lack of correct signal of the recovery, after the
recent recession. Though the signs of a financial recovery are visible, many experts of the
financial markets feel that the pace of the recovery could be much slow and it would take time
for the economies of various nations to achieve the strong growth rate which they recorded few
years ago. So, the investments for 2010 should be done in diversified sectors to protect your
money and gain decent profits. Given below are the strategies for best investments for 2010.

Good Investment Options for 2010--

Investments for 2010:
Mutual funds-
Mutual funds can be one of the best investments for 2010 if you invest in those mutual funds
which have a good track record of giving good returns to the investors. Mutual funds are the best
investments for those who are not comfortable with the stock market investments. Again, like
stocks, diversified mutual funds can earn a good annual return. You should read the terms and
conditions of the mutual funds before making any kind of investment. More on:

 Mutual Funds Investment Advice

 How do Mutual Funds Work

Bank deposits-

Bank deposits are the best investments for 2010 and also for the years to come, as you do not
have to spend sleepless nights thinking whether your money is safe or not. You will keep getting

Page 49
the stipulated returns in the form of interest, in this form of investment. Fixed deposits and
provident funds are known to give good returns to the investors. More on:

 Best Investments During Inflation

 Best Short Term Investments
 Best Ways To Invest Money

The above mentioned investment ways can be the best investments for 2010, if you invest at the
right time. Best of luck!

By-chalie
Published: 1/28/2010
http://www.buzzle.com/articles/best-investments-for-2010.html

Page 50
16) safe investments-how safe is your money?

After working hard to build a nest egg for retirement, you want to know that your investments
provide a good return but remain safe. Although well managed stocks, mutual funds, and
corporate bonds can provide superior returns, risk goes hand in hand with reward. Your principal
and earnings are not guaranteed and can be dramatically affected by a down turn. As people near
retirement, it makes sense to move investments into fixed income products such as Treasuries,
Government agency bonds or certificates of deposits.

Treasury bills, notes, and bonds.

.
The only difference in the above is the length of the term. T-Bills are offered with a term length
of 1-year or less. T-Notes are offered with a term length of 1-year to 10-years. Finally, T-Bonds
are offered with term lengths greater than 10-years. We will collectively call these Treasuries.
Treasuries are issued by the Federal Government and you are basically loaning them your funds
for which they guarantee to pay you a certain interest rate. They are guaranteed by the 'full faith
and credit' of the United States Government. You will always get your principal back at maturity.
Treasuries can also be purchased in large denominations. Their safety and ease comes with a
relatively low rate of return. They can also be bought and sold in the secondary market.
Treasuries are a safe investment, but as with any of these fixed income investments, they do
carry the risk that interest rates and/or inflation will rise during the term, thus eroding their
spending power. Treasuries are exempt from state and local taxes.

Government agency bonds

Government Agency Bonds are issued by agencies of the Federal Government and with the
exception of the GNMA (Ginnie Mae - Government National Mortgage Association) they are
NOT backed by the 'full faith and credit' of the government. As far as safe investments go,

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GABs are considered next in safety to Treasuries and Certificates of Deposit. GABs carry a
AAA rating, but because they aren't backed like Treasuries and there can be a prepayment or call
risk, they offer superior rates to Treasuries. A prepayment risk comes into play if the underlying
loans that the security is backed by, pay off early and thus decreases the life of your bond. GABs
are usually offered with maturities from 2-years to 15-years, but have call periods where the
principal can be returned to you without having to pay further interest. This is a call risk. In a
falling rate cycle, your bond will most likely be called and your re-investment rate will be lower
than what it was. Many people find themselves having to buy long-term bonds to try to maintain
an attractive rate. In a rising rate cycle, your funds may go the life of the bond and miss out on
higher rates. Many GABs are exempt from state and local taxes. Government Agency bonds can
be purchased in large denominations and are considered a very safe investment.

Certificates of deposit (cd)-

Banks and credit Unions offer Certificates of Deposit for terms usually from 90-Days to 5-years.
As long as the CD is offered by an FDIC insured bank or NCUA insured credit union, your
principal is guaranteed by the federal government up to $100,000 for a single account; $200,000
for a joint account; and $250,000 for an IRA. If you open a CD that compounds and open it for
less then the interest you will earn, the principal and interest would be guaranteed up to the
above amounts. Because, they carry no risk (as noted above), certificates of deposit are an
attractive and very safe investment. The interest from CDs is fully taxable. Most CDs are fixed
for the term you select, but there are banks that offer callable CDs and even CDs linked to
different market indices. Certificates of deposit generally offer yields that are better than
Treasuries and GABs, but you may want to do a tax analysis to see what the Tax Equivalent
Yield is. You can open Certificates of Deposit at multiple institutions and receive $100,000 of
FDIC insurance at each institution. Searching for multiple institutions can be time consuming.

Deposit brokers can assist you and save you time with this search.
Chris Duncan is a NASD Registered Representative. He specializes in helping clients find the
best and highest CD rates nationwide. His clients include individuals, financial institutions,
corporations, and public agencies. Visit us at www.jumbocdinvestments.com or our Certificate
of Deposit Rates page.

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 Author –chris Duncan
http://www.buzzle.com/articles/safe-investments-money.html

18)Fixed deposit: The best and secured way to save money

Though the economic position of all the countries is going on up and downs all over the world, the
banking system in India is so strong till now. As the encroachment of the credit crunch and raising
speculation are the main reasons of the present day financial crisis, people get fear to invest their
money in share market.

The businessmen in India have positive feeling regarding their financial position. As the economic
position of India is mostly based on the government organisations, the speculation and financial criss
have not shown much effect on Indian economy. If you study the present economic position of India,
you can come to a conclusion that investing in a stock market or mutual funds will make you to face
many problems. A lot of insecurity and confusions are faced by the investors, who want to invest in
their money in public or private sectors. In these situations, they are searching for the best alternatives
to save or invest their money.

Many of the economists in India say that going for fixed deposit is the right solution, when it
compared to all the other sources where you can invest your money. This is the best source to rescue
from the present liquidity crises.

The fixed deposit is nothing but an account that allows the people to deposit their money for a period
of some time. Depending on their convenience, people can choose the deposit period that say for a
minimum period of 15 days to 5 years and more than that. When the deposit period comes to an end,
the depositors will get high amount of interest on their deposited money. Depositing money in Indian
banks is safer than other sources as the all the banks in India are under the control of Reserve Bank of
India.

The main advantage of going for these deposits is that the depositors get high interest rates than the

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saving bank account holders. They will get lump-sum of money at a time, after the completion of
maturity period of the deposit. Moreover, people do not get any insecure feeling on their deposits. The
fixed deposits have been playing a prominent role, since the banking system has been introduced in
the Indian economy market. They are one of the beneficial saving methods. Some years ago, people
showed great interest for going long term deposits. But, now-a-days, due to the drastic changes that
are occurred in the economic position of India, most of the investors want to go for short term fixed
deposits.

The interest rates of the fixed deposits vary from one bank to another bank. To extend their services
as well as to attract all segments of the investors, most of the banks in India offer many facilities to
their customers, who want to deposit money in their banks. One of the main facilities is that the over
draft facility which allows the depositors to draw money on the deposited amount, before the
completion of the maturity period of deposit. On the request of depositors, some of the banks can
transfer the interest amount on fixed money to the current or saving account of the depositor.

The minimum fixed amount can range from RS. 100 to an unlimited amount. If any one wants to open
a fixed deposit account in a bank, he should inquire about the interest rates of all the banks. Some of
the websites over the Internet help you to find the best bank that offers high amount of interest rates .

Author: jolly

http://www.articlealley.com/article_730903_19.html

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19)Bank Term Deposit; What Purposes Does It Serve?

Bank term deposit is a monetary deposit at a financial institution that is held for a fixed term and
cannot be withdrawn until after the expiration of the term agreed upon by the parties usually the
financial institution and the customer. When the term or duration for which the deposit is held
expires, it can either be withdrawn or held for another additional term. In most cases, the longer
the term for which the deposit is held, the better the financial yield. Many banks offer term
deposits in Australia so investors have a wealth of choices on their hands.

There are various types of bank term deposits. These include the revolving bank term deposit that
allows a financial institution to retain the monetary balance in the customer's current account at
the roll over date as specified by the customer. The financial institution will automatically transfer
any fund that is above the limit to the specified term deposit. The other type of term deposit is the
unchanging term deposit. The unchanging term deposit is where the amount that was deposited
remains unchanged throughout the period and the interest earned is credited to the principal sum at
every rollover. The other type of term deposit is capitalized term deposit that allows the deposit to
be increased by the interest that is accrued at every rollover.

A bank term deposit serves many purposes. Firstly, it allows a customer to have many options
available particularly in regard to currency denomination, deposit types and terms. The deposit
also allows a customer the option of changing the financial parameter of the deposit at every
rollover date of the rollover deposit. Secondly, a term deposit allows an investor to increase
investment earnings while at the same time offering the investor a better monetary return
compared to traditional commercial and retail savings accounts. The term deposit allows an
investor the option of selecting between fixed or variable interest rate thus maximizing the profits.

Thirdly, a bank term deposit gives an investor the flexible financial option of receiving interest
payments either quarterly, annually, semi annually or upon maturity of the term agreed upon
between the financial institution and the customer. Fourthly, a term deposit also serves the purpose
of acting as collateral as it can be used by customers who intend to apply for a loan in any bank in
Australia. It also allows an investor the option of adding money to the deposit and reinvesting the

Page 55
amount for the future. In addition, a term deposit also allows an investor the option of
withdrawing part of the deposited funds and reinvesting the remaining funds.

The other purpose that the term deposit serves is that it gives an investor a chance to withdraw the
entire amount that was invested in the financial institution. A bank term deposit is useful as it
gives a customer the option of automatically transferring a fixed fund or above the limits amounts
from existing current accounts term deposits. In addition, a term deposit offers investment
flexibility due to the various terms that are offered to the customer. Such terms range from
between one year and three years. The term deposit allows an investor the option of guaranteeing
financial returns for business savings with a wide range of choice of fixed terms.

Mel writes about bank term deposit, credit union and other finance topics.

Author: Mel C

: http://www.articlealley.com/article_898412_19.html

Page 56
20) Genius Investment

Genious high –yeild deposit account

Have you been looking for a high-yield deposit account with flexible terms of investment? The
Genius HYDA combines one of the highest returns in the industry with the flexibility of your
local bank account. Receive up to 25% per month and be able to withdraw capital or interest at
any time. Our funds are investing mainly in highly lucrative equities and bonds, focusing on
emerging economies.As of 10th of June, 2009 we also offer the Genius High-Yield Deposit
account. This new investment product offers interest yields comparable to our investment funds
with the flexibility of a deposit account similar to the one you have in your bank.

In today's complex and dynamic economic environment, being an educated investor is vital to
achieving your financial goals. The fast developing technology and the expanding financial
globalization boost investment opportunities, bringing them to your doorstep. Today you can
invest in a mutual fund in India, in an investment fund in Australia, or buy shares in a textile
manufacturing plant in China, without leaving your home.

The emerging economies of Eastern Europe and East Asia are now providing some of the most
lucrative investment opportunities, becoming attractive and healthy investment environments.
Investors who have penetrated these markets are adopting a global perspective, breaking new
ground.

Types of investment-

There are several types of investments offered globally, the main one being the investment fund.
An investment fund is a financial tool that attracts the resources of many investors and invests
them in a variety of stocks, bonds and other securities. The main advantage of an investment
fund is that it provides access to a range of sophisticated investments through a managed
service.

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Most investment funds are targeting either specified industries or geographic regions. Some of
them are seeking to achieve growth, while others aim to provide an income for the investors.
One of the main advantages of the investment funds is their low risk, determined by investment
diversification.

While investment in a single equity (stock) can do very well, the risk of loosing your entire
investment in case the company collapses is high. It happened even to huge companies such as
Enron and Marconi. By investing in a range of equities (stocks) and bonds, the capital risk is
reduced substantially

Additionally, CD or Certificate of Deposit accounts are widely offered by many financial

institutions and private investment companies. HYDA is a term deposit account with a fixed
interest rate and maturity date. The main advantage of HYDA is guaranteed income on
investment.

Genius offers both investment funds and CD Accounts for the convenience of our investors. For
information on investment function

Date Published: 30th December 2009

Author: Christopher.

http://www.articlealley.com/article_1317381_63.html

Page 58
CHAPTER-4

Page 59
RESEARCH METHODOLOGY

Page 60
 Research methodology

Research methodology is a systematic way, which consists of series of action steps, necessary to
effectively carry out research and the desired sequencing to these steps. The marketing research
is a process of involves a no. of inter-related activities, which overlap and do rigidly follow a
particular sequence. It consists of the following steps:-

 Formulating the objective of the study

 Designing the methods of data collection

 Selecting the sample plan

 Collecting the data

 Processing and analyzing the data

 Reporting the findings

DATA COLLECTION

The study was conducted by the means of personal interview with respondents and the
information given by them were directly recorded on questionnaire.

For the purpose of analyzing the data it is necessary to collect the vital information. There are
two types of data, this are-

 Primary Data

 Secondary data

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SECONDARY DATA:-

Secondary data means data that are already available i.e. they refer the data which have already
been collected and analyzed by someone else. When the researcher utilizes secondary data, than
he has to look into various sources from where h e can obtain them, in this case he is certainly
not confronted with the problems that are usually associated with the collection of original data.
Secondary data may either be published data or unpublished data. Usually published data are
available in:

 Various publications of the central, state and local government;

 Various publications of foreign government or of international bodies and their

subsidiary organizational;

 Technical and trade journals;

 Books, magazines and newspapers;

 Reports and publications of various associations connected with business san industry,
stock exchanges etc.;

 Reports prepared by research scholars, universities, economists etc;

 Public records and statistics, historical document and other source of published
information.

The source of unpublished data are many; they may be found in diaries, letters, unpublished
biographies and autobiographies and also may be available with scholars and research workers,
trade associations, labor because and other public private individuals and organization.

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 Limitations of the study

 Duration of practical training was just of four weeks. It was not sufficient.

 Due to heavy engagement of the top management people and other personnel,
many other information could not be collected within the limited span of time.

 To maintain secrecy, the company people do not provide various types of

information, such as actual sales to various customers, zone wise sales, depot
setup cost, depot handling cost etc.

 Their recommendations are the outcome of an analysis made individually.

 Another analysis may arrive at certain other recommendations after using same
data.

Page 63
CHAPTER-5

Page 64
 DATA ANALYSIS &INTERPRETATION

Respondents’ response about the awareness of the investment products

Page 65
Que.1: -What the people think about the Investment

S. No. Particulars Response

A Necessity for protection security 67

B Imposition of a burden of expenses 17

C A compulsory tool for tax saving 16

80

70

60

50

40 Series1

30

20

10

0
Security Expenses Tax Saving

INTERPRETATION:-

On the basis of above analysis, we can say that people mostly treat investment as a protection
instrument. 67% people think investment as a necessity for protection & security.,17% as an
expense and 16%people take for tax benefit.

Que. 2: - Main consideration that a customer looks at while purchasing an Investment

Policy.

S. No. Particulars Response

Page 66
 A TAX 10

B SAVING 29

C PROTECTION 53

D PENSION 3

E INVESTMENT 5

60

50

40

30 Series1

20

10

0
x g n on nt
Ta vin c tio si em
Sa ot
e
Pe
n
e st
Pr In
v

INTERPRETATION-

On the basis of above analysis, we can say that people purchase investment policy mostly for the
protection purpose 53% so use to purchase traditional plans .,29% for saving,10% for tax ,5% for
investment and 3% as an investment.

Que. 3: -Plan that a respondent prefers to buy

Page 67
 S. No. Particulars %age

A Protection Plan 47

B Investment Plan 19

C Pension Plan 10

D Children Plan 24

50
45
40
35
30
25 Series1
20
15
10
5
0
t n
io
n en on re
ct m nsi ild
t e
e st Pe Ch
P ro nv
I

INTERPRETATION-

On the basis of above analysis, we can say that people prefer to buy protection & children
plans mostly.

Que. 4: - Customers’ expectations from investment products-

Page 68
 S. No. Particulars %age

A Innovative Products 5

B Attractive Riders 2

C Reasonable Premium 24

D Better Customer Service 47

E High Risk Coverage 22

50
45
40
35
30
25 Series1
20
15
10
5
0
e
t iv t iv
e m i ce s k
v a c iu rv Ri
no tra em Se
In At Pr

INTERPRETATION-

On the basis of above analysis, we can say that people expect better customer service
from the investment products 47%, reasonable premium on their investment.24%,high risk
coverage 22%,innovative products 5%and attractive riders ,5%.

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Que. 5: - HDFC investment products provides better facilities than ICICI investment
products

S. Particulars %age
No
.

A Yes 34

B No 2

C Cant say 64

70

60

50

40
Series1
30

20

10

0
Yes No Cant Say

INTERPRETATION-

On the basis of above analysis, we can say that people are not aware about these products so we
can not come on any conclusion. As about 34% of people say yes, ,2% people say no,but
remaining 64% people cant reach to a conclusion.

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Que. 6: -Is the respondent satisfied with the plan he bought?

S. No. Particulars Response

A Yes 67

B No 17

C I haven’t bought any 16

80

70

60

50

40

30

20

10

0
Yes No Haven't

INTERPRETATION-

On the basis of above analysis, we can say that people are satisfied with the plans they have
bought.67% and least 17%.

Page 71
CHAPTER -6

Page 72
 FINDINGS&SUGESSTIONS

Findings-

Page 73
  The market share of ICICI bank is higher than HDFC bank.
 More customers are satisfied by ICICI bank than with HDFC bank
 The organization structure of both the banks is of good level
 The investment options offered by ICICI bank are more marketable than HDFC bank
 The position of ICICI bank is higher than that of HDFC bank in the mind of consumers...
 Agents play major role in awaring people about the benefits of investment.
 People think investment as a protection tool.
 People purchase investment mostly for protection purpose and some of people for saving.
 The goodwill of the company also attracts customers toward an investment.
 People also do investment as a security .

Suggestions-

Page 74
 ICICI Bank and HDFC bank has to improve its brand image, i.e. it has to position itself in
the minds of prospects in a better way in comparisons to others.

 It should provide better career opportunities for the retention of its potential advisors.
 Further it has to provide training to its recruited advisors by good and efficient training
methods, which might be a little bit customized if needed.
 It should more emphasize in advertising, as it is the most powerful tool to position ant brand
in the mindsets of customers.
 It should provide online training and for those who are in jobs and want to become advisors
ICICI should provide evening training classes, so that they can join the training after doing
there jobs.

Page 75
CONCLUTION

Conclusion

Page 76
 Banking is also now being regarded as a versatile financial planning tool. Research indicates
that Indians have four basic financial needs during their life asset accumulation (such as
buying a house or car), protecting their family, securing their children’s education, and
provision for their retirement.

India being a country having a huge population of around one billion people with only 32%
of the banking population in India possessing banking the country has a vast potential,
which has been left untapped till now.

For Banking company Banking advisors are the lifeline and a very huge asset so each
company try to recruit and select a potential force of Banking advisors because this is the
advisors who generate maximum business for the Bank . Banking advisors provide a very
strong support to the Bank and do all possible efforts to generate huge amount of profit to
the company and for him.

During the last two decades competition, consolidation and convergence have set the stage for
diversification in the Banking sector in India. Commercial banks are diversifying to generate
income stream from non-interest sources of income comprising of fee income, income from
financial services, security trading foreign exchange etc. In this paper an attempt had been made
to study the determinants of diversification of banks in India and to analyze the financial
performance of banks over the period of 2000 to 06. For this purpose, commercial banks in India
have been categorized into four categories i.e. , nationalized banks, SBI and Associates, New
Private sector banks and foreign banks. Profitability ratios like Return on assets, Interest income
to total income, non interest income to total income ratio, capital ratio along with correlation
between interest income and other income has been found out to examine the financial
performance of diversified banks. It has been found that though the interest income is still a
major source of income in the operations of banks in India, but the phenomenon of non interest
income is also acquiring added significance in the wake of declined interest margins
and increased disintermediation in commercial banking.

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