50633694 a-project-report-on-360-degree-fiancial-planning
-
Upload
rohitsinghbisen -
Category
Economy & Finance
-
view
2.535 -
download
2
description
Transcript of 50633694 a-project-report-on-360-degree-fiancial-planning
BAJAJ CAPITAL LTD. C.I.M.T
A
PROJECT REPORT
ON
3600 FINANCI
AL
PLANNING AND AWARENESS OF BAJAJ
CAPITAL Ltd. IN LUCKNOW
Page | 1
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
(LIFE INSURANCE)
Submitted in fulfillment of Summer Training Program for
M.B.A. (Finance and Marketing)
Session 2009-2011
Submitted to Submitted By
Mr. Vivek Singh Swati Gupta
(Branch Head)
Mr. Dheerendra Kumar
(Area Manager)
Central Institute of Management & Technology
Page | 2
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
U.P. Technical University, Lucknow
Page | 3
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
ACKNOWLEGDEMENT
I express my deepest sense of gratitude of Mr. for inspiring me to do this
research project. During the whole research work he guided and provided me
the valuable inputs, which helped me in the completion of the project. Despite
his busy schedule he granted me a generous amount of his time with great
interest.
I owe my sincere regards and feel extremely grateful.
A special thank to Sir who constantly monitored my work and preceded support
and guidance the project
I am thankful to all those respondents who spared their valuable time attending
to my questions, which has contributed a great in the completion of the project.
SWATI GUPTA
M.B.A. (F&M.) IIIrd Semester
C.I.M.T. (U.P.T.U.)
2009-2011
Page | 4
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Page | 5
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
DECLARATION
I hereby declare that the following documented project report titled "360
degree financial planning and awareness of Bajaj Capital in Lucknow" is
an authentic work done by me.
The study was undertaken as a part of the course curriculum of M.B.A.
Full time Programme Central Institute of Management & Technology U.P.
Technical University, Lucknow.
I here by declare that the study has not been submitted to any other
institute/organization for the reference.
SWATI GUPTA
M.B.A. IIIrd Semester
2009-2011
Page | 6
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Page | 7
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
PREFACE
Investment is the sacrifice of certain present value for the uncertain future
reward. It entails arriving at numerous decisions such as type, mix, amount,
timing, grade etc. of investment and disinvestments. Further, such decisions
making has not only to be continuous but rational too. Broadly speaking, an
investment decision is a trade off between risk and return. All investment
choices are made at points of time in accordance with the personal investment
ends and in contemplation of an uncertain future.
Since investments in securities are revocable, investment ends are transient and
investment environment is fluid, the reliable bases for reasoned expectations
become more and more vague as one conceives of the distant future.
Investors in securities will, therefore, from time to time, reappraise and re-
evaluate their various investment commitments in the light of new information,
changed expectations and ends.
Page | 8
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
CONTENTS
1. INTRODUCTION
2. COMPANY PROFILE
3. AIMS AND OBJECTIVE
4. OBJECTIVE OF STUDY
5. RESEARCH METHODOLOGY
6. PROBLEM AND LIMITATION
7. FINDING ANALYSIS AND INTERPETATION
8. SWOT
9. SUGGESTION/RECOMMENDATION
10. CONCLUSION
11. APPENDIX
12. BIBLIOGRAPGHY
Page | 9
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
COMPANY PROFILE
Bajaj Capital is one of India’s leading Financial Services companies offering
Free Advice on Investments, Insurance, Tax Saving, Retirement Planning,
Financial Planning, Children’s Future Planning and other services. We also
have a wide range of products and services for Corporates, High Net worth
Individuals, and NRIs… all under one roof.
At Bajaj Capital, we believe in dreaming big. Dreams inspire us to excel. They
ignite hope and kindle in us the passion to stretch our limits. We also believe
that nothing can or should stop us from realising our dreams… and financial
constraints should be the last thing to stop anyone.
Page | 10
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Four decades of excellence
For over four decades, we have been helping people realise their aspirations by
helping them make their wealth grow, and plan their financial lives.
Today, we are a one of the largest financial planning and investment
advisory companies in India, with a strong presence all over the country. We
take pride in serving our customers – both individual and institutional – and are
known for our strong professionalism and work ethics.
Wide range of services
We offer a comprehensive range of services including financial planning and
investment advice, and the entire gamut of financial instruments and
investment products of almost all major companies, both public and private. In
addition, we also provide investment assistance by helping you complete all
the formalities, and help you keep regular track of your investments.
These services and products are delivered through our network of 134 Bajaj
Capital Investment Centres located all over the country.
We are also a SEBI-approved Category I Merchant Banker. We raise
resources for over 1,000 top institutions and corporate houses every year, and
Page | 11
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
offer specialised services to Non-Resident Indian (NRIs) and High
Networth Clients.
Page | 12
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
What you can expect from us
Sound, research-based advice
Unbiased, independent and need-based advice
Prompt, courteous service
Honest, ethical dealings
Accessibility
Page | 13
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Milestones
The History of Bajaj Capital
Bajaj Capital has contributed to the growth of the Indian Capital Market at
every step.
In 1965, we were the first to innovate the Companies Fixed Deposit. Today, we
are playing an active role in the growth of the Indian Mutual Fund industry.
We are also working closely with private insurance companies to deepen India's
insurance market.
Here is a brief gist of our journey throug the years.
1964
Bajaj Capital sets up its first Investment Centre™ in New Delhi to guide
individual investors on where, when and how to invest.
Page | 14
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
India's first Mutual Fund, Unit Trust of India (UTI) is incorporated in the same
year.
1965
Bajaj Capital is incorporated as a Company. In the same year, the company
introduces an innovative financial instrument – the Company Fixed Deposit.
EIL Ltd. (Oberoi Hotels, then known as Associated Hotels of India Ltd.)
becomes the first company to raise resources through Company Fixed Deposits.
1966
Bajaj Capital expands its product range to include all UTI schemes and
Government saving schemes in addition to Company Fixed Deposits.
1969
Bajaj Capital manages its first Equity issue (through an associate company) of
Grauer & Wells India Ltd.; right from drafting the prospectus to marketing the
issue.
1975
Bajaj Capital starts offering 'need-based' investment advice to investors, which
would later be known as 'Financial Planning' in the investment world.
Page | 15
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
1981
SAIL becomes the first government company to accept deposits, followed by
IOC, BHEL, BPCL, HPCL and others; thus opening the floodgates for growth
of retail investment market in India.
Bajaj Capital plays an active role in all the schemes as 'Principal Brokers'
1986
Public Sector Undertakings (PSUs) begin making public issues of bonds
MTNL, NHPC, IRFC offer a series of Bond Issues. Bajaj Capital is among the
top ranks of resource mobilisers.
1987
SBI leads the launch of Public Sector Mutual Funds in India. Bajaj Capital
plays a significant role in fund mobilisation for all these players.
1991
SBI issues India Development Bonds for NRIs. Bajaj Capital becomes the top
Page | 16
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
mobiliser with collections of over US $20 million.
1993
The first private sector Mutual Fund – Kothari Pioneer – is launched, followed
by Birla and Alliance in the following years. Bajaj Capital plays an active role
and is ranked among the top mobilisers for all these schemes.
1995
IDBI and ICICI begin issuing their series of Bonds for retail investors. Bajaj
Capital is the co-manager in all these offerings and consistently ranks among
the top five mobilisers on an all-India basis.
1997
Private sector players lead the revival of Mutual Funds in India through Open-
ended Debt schemes. Bajaj Capital consolidates its position as India's largest
retail distributor of Mutual Funds.
1999
Bajaj Capital begins marketing Life and General Insurance products of LIC and
GIC (through associate firms) in anticipation of opening up of the Insurance
Sector. Bajaj Capital achieves the milestone of becoming the top 'Pension
Page | 17
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Scheme' seller in India and launches marketing of GIC's Health Insurance
schemes.
2000
Bajaj Capital implements its vision of being a 'One-stop Financial
Supermarket.' The Company offers all kinds of financial products, including the
entire range of investment and insurance products through its Investment
Centre. Bajaj Capital offers 'full-service merchant banking' including
structuring, management and marketing of Capital issues. Bajaj Capital
reinvents 'Financial Planning' in its international sense and upgrades its entire
team of Investment Experts into Financial Planners.
2002
The company focuses on creating investor awareness for Financial Planning
and need-based investing. To achieve this goal, the company introduced the
International College of Financial Planning. The graduates of this institute
become Certified Financial Planners (CFPs), a coveted professional
qualification.
Page | 18
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
2004
Bajaj Capital obtains the All India Insurance Broking Licence. Simultaneously,
a series of wealth creation seminars are launched all over the country, making
Bajaj Capital a household name.
2005
Bajaj Capital launches 360° Financial Planning, a software-based programme
aimed at encouraging scientific and holistic investing.
2007
Bajaj Capital launches Stock Broking and Depository (Demat) Services.
2008
Bajaj Capital launches Just Trade, an online Platform for investing in Equities,
Mutual Funds, IPO's
Page | 19
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
MISSION, AIMS & OBJECTIVES
Bajaj Capital's Mission Statement
The focus of our organisation is to be the most useful, reliable and efficient
provider of Financial Services. It is our continuous endeavour to be a
trustworthy advisor to our clients, helping them achieve their financial goals.
Aims
To serve our clients with utmost dedication and integrity so that we
exceed their expectations and build enduring relationships.
To offer unparalleled quality of service through complete knowledge of
products, constant innovation in services and use of the latest technology.
To always give honest and unbiased financial advice and earn our clients'
everlasting trust.
To serve the community by educating individuals on the merits of
Financial Planning and in turn help shape a financially strong society.
To create value for all stake holders by ensuring profitable growth.
To build an amicable environment that accords respect to every
individual and permits their personal growth.
To utilise the power of teamwork to function as a family and build a
seamless organisation.
Page | 20
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Why Invest Through Bajaj Capital
Wide range of products and services
41 years experience as Investment Advisors and Financial Planners
More than eight lakh satisfied clients all over India
Countrywide network of 134 branches
Over 12,000 NRI clients across the globe
Personalised wealth management advice
24 x 7 online accessibility through www.bajajcapital.com
Strong team of qualified and experienced professionals including CAs,
MBAs, MBEs, CFPs, CSs, Insurance experts, Legal experts and others
SEBI-Approved Category I Merchant Bankers
Group Co BCIBL is an IRDA-licensed Direct Insurance Broker
Page | 21
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Who’s at Bajaj Capital
Mr. K.K. Bajaj
Chairman
A visionary par excellence, a pioneer and a leader, Mr K.K. Bajaj has been
instrumental in shaping Bajaj Capital’s emergence as one of India’s largest
Investment Advisory companies.
He is a highly respected figure in the field of institutional and personal finance
and Company FDs. His emphasis on honesty, ethics and values are the guiding
principles of the organisation.
Mr Bajaj is also a prolific writer and has written over 200 articles on diverse
issues such as Personal Finance, Economic Affairs, and Health.
Mr. Rajiv Deep Bajaj Vice Chairman & Managing Director
A qualified Financial Planner, Mr Rajiv Deep Bajaj was the first to introduce
the concept of Financial Planning in India. In fact, he is the Founding Chairman
of the Association of Financial Planners (AFP). He is also amongst the first
Page | 22
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
batch of 25 Certified Financial Planners (CFP tm) designation holders in India.
A Post-graduate in Management and holder of an International Certificate for
Financial Advisors from the Chartered Insurance Institute, London, Mr Rajiv
Deep Bajaj has played a pivotal role in expanding Bajaj Capital's reach across
the country. He has recently pursued an Executive MBA in International
Wealth Management under an exchange program between University of
Geneva, Switzerland and Carnegie Mellon University, Pittsburgh, USA.
His youthful energy, dynamic leadership, vision and 16 years strategic
management experience in Banking, Financial Advisory, Insurance Broking
and Financial Planning have strengthened Bajaj Capital.
The Media and Industry honchos have regularly acclaimed Mr. Rajiv Deep
Bajaj for his strengths as a powerful orator and writer. His views on various
Investment Strategy and Financial Planning-related issues are regularly flashed
in some of the leading media entities like The Economic Times, Business
Today, Star TV, CNBC and Aaj Tak. His personal life goal is to spread
‘Financial Education’ amongst the Indian masses in order to increase their
knowledge base and shift their perspective from ‘Saving to Investing’.
Page | 23
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Mr. Sanjiv Bajaj Joint Managing Director
Mr. Sanjiv Bajaj started his career in 1995 as managerial trainee, worked on
various projects which included developments at alternate channel of
distribution like Broker's associations...etc. From here, he moved on to
Investment Advisory services, which included understanding the client's needs,
and by using various tools of financial planning to offer them a solution to meet
his requirements. Mr Sanjiv Bajaj is versatile personality with diverse areas of
interest. He is a Post-graduate in Business Management with specialisation in
Finance, and holds an International Certificate for Financial Advisors from the
Chartered Insurance Institute, London. Thanks to him, Bajaj Capital is today
the largest individual agent for LIC. Mr Sanjiv Bajaj has a keen interest in IT,
and has played a major role in implementing the ERP software and E-
commerce activities in the company Mr. Anil Chopra
CEO & Director Mr. Anil Chopra is the Chief Executive Officer & Director
of Bajaj Capital Limited, He joined the Company in 1984. Mr. Chopra has been
instrumental in expanding the branch network of Bajaj Capital Ltd. all over
India.
A Chartered Accountant and a Certified Financial Planner, Mr Chopra is
Page | 24
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
credited with introducing international accounting and HR practices in the
organisation. His most valuable contribution, however, has been in building up
a financially literate society and making Bajaj Capital a strong retail brand. He
is considered an authority, and is widely sought after by the media for quotes on
key developments in the industry.
The Significance of Our Logo
Our logo depicts Lord Ganesha who is the source of all our values and ethics in
business.
The large ears of Lord Ganesha remind us to hear more. We listen
carefully to our clients to understand their needs.
The weight of the trunk on the mouth symbolises silence. We work
silently, without blowing our own trumpet.
The long trunk symbolises continuous exploration. We explore all
avenues to provide the best investment opportunities for our clients.
The heavy posture of Ganesha symbolises stability. We help our clients
to attain financial stability through wise investments.
Page | 25
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Lord Ganesha is known as the remover of obstacles and bestower of
prosperity. We emulate His example and try our best to help our clients
attain prosperity by proper financial planning.
Our logo has a yellow background. Yellow is the colour of gold, which
symbolises wealth. According to Vedic lore, it is also the colour
associated with Brihaspati, the guru and counsellor of the Gods. We offer
our clients sage counsel to make their wealth grow.
The letters are in red. Red is the colour rajas – symbolising power and
incessant activity. It symbolises our aggressive quest for your well-being
and happiness.
The white streak represents the trunk of Lord Ganesha. White is the
colour of satva guna, and implies our selfless commitment to your life-
long happiness.
Page | 26
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
360 0 FINANCIAL PLANNING AND
AWARENESS OF BAJAJ CAPITAL
Experience the power of Bajaj Capital's 360
The only thing permanent in life is change. Times change. People change. So
does life. You expect life to be much better tomorrow than it is today.
Tomorrow, you hope to fulfil all your dreams and aspirations. But what
happens if things take an untoward turn? Or, if there is an eventuality? Perhaps
it's time for you to change the way you plan your investments...
Learn more about Bajaj Capital's 360º Financial Planning
Page | 27
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
•Why do you need Bajaj Capital's 360° Financial Planning?
•Who needs 360° Financial Planning?
•What is 360° Financial Planning all about?
•How will 360° Financial Planning help me?
•How do I get my personalised 360° Financial Plan created?
Page | 28
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Don’t just dream... Plan!
Financial Planning is becoming increasingly popular in developed countries all
over the world. Now, with a little help from Bajaj Capital, you too can give
yourself the 360° Financial Planning edge! Get your Financial Plan
prepared now Why do you need Bajaj Capital's 360° Financial Planning?
You may have many dreams, needs and desires. For example, you could be
dreaming of:
•Owning a new car Buying a dream house Providing your children with
the best education Planning a grand wedding for your children
•Having a great time after your retirement
But in today's world of skyrocketing costs and increasing inflation, how many
of these dreams can you hope to turn into reality? By planning well, you can
utilise your limited resources to the fullest.
360° Financial Planning helps you see the big picture and invest for specific
long-term and short-term goals well in time.
Who needs 360° Financial Planning?
Page | 29
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Everyone does! Because everyone has a right to dream. And realising dreams is
easier when you work to a plan that's:
•Reliable Realistic
•Proven
Bajaj Capital's 360° Financial Planning Programme could make a difference to
all those who wish to lead a worry-free, financially secure life.
What is 360° Financial Planning all about?
360° Financial Planning is a unique software-based simulation that takes a
holistic view of your life-long financial needs and charts a personalised
investment strategy to help you meet them. Broadly, it involves:
•Identifying your current financial status Listing and prioritising your
goals Creating a sound investment plan to achieve them
•Monitoring the plan to facilitate swift corrective action, if needed
360° Financial Planning is based on the premise that every individual has
certain basic financial needs that are expressed at various stages of life (getting
married, buying assets like homes, vehicles, or providing for your children's
education and wedding). With the help of 360°Financial Planning, you can
Page | 30
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
prepare yourself well in time for all these goals.
How will 360° Financial Planning help me?
Instead of investing in an ad-hoc manner, 360° Financial Planning helps you
take a holistic, all-round view. Briefly, 360° Financial Planning comprises:
•Investment Planning : To make your wealth grow
•Cash Flow Planning : To provide for assets and meet the periodic cash
requirements
•Tax Planning : To save on taxes and increase your income
•Insurance Planning : To protect yourself, your family and your assets
•Children's Future Planning : To give your children a financially secure
future
•Retirement Planning : Because retirement is a time to relax, not to get
worried Top
How do I get my personalised 360° Financial Plan created?
Here’s how Financial Plans are prepared:
•The process begins with identifying your needs with the help of the Need
Analysis Form. Our Financial Planners then use the especially-created
Page | 31
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
360° Financial Planning software to generate a personalised Snapshot.
The Snapshot gives you a graphic account of all your financial
requirements, at every stage of your future life. Based on the Snapshot,
our experts work out an investment strategy.
•Once implemented, our experts keep regular track of your investments.
A Financial Planning session takes just 15 minutes
Page | 32
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Investment Planning
Everyone needs to save for a rainy day. Once you have
saved enough to take care of emergencies, you should start thinking about
investing and to make your money grow. We can help you plan your
investments so that you can reap adequate benefits and achieve your financial
goals.
Bajaj Capital’s Investment Planning Service includes:
Risk Profiling
Asset Allocation and Portfolio Construction
Creation and Accumulation of Wealth through Systematic Investment
Plans (SIP)
Regular review of progress and Portfolio Rebalancing
Essentially, Investment Planning involves identifying your financial
goals throughout your life, and prioritising them. Investment Planning is
important because it helps you to derive the maximum benefit from your
Page | 33
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
investments.
Your success as an investor depends upon your ability to choose the right
investment options. This, in turn, depends on your requirements, needs
and goals. For most investors, however, the three prime criteria of
evaluating any investment option are liquidity, safety and return.
Investment Planning also helps you to decide upon the right investment
strategy. Besides your individual requirement, your investment strategy
would also depend upon your age, personal circumstances and your risk
appetite. These aspects are typically taken care of during investment
planning.
Investment Planning also helps you to strike a balance between risk and
returns. By prudent planning, it is possible to arrive at an optimal mix of
risk and returns, that suits your particular needs and requirements.
Page | 34
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
What Is Cash Flow Planning?
In simple terms, cash flow refers to the inflow and outflow of money. It is a
record of your income and expenses. Though this sounds simple, very few
people actually take the time out to find out what comes in and what goes out of
their hands each month
Cash flow planning refers to the process of identifying the major expenditures
in future (both short-term and long-term) and making planned investments so
that the required amount is accumulated within the required time frame.
Cash flow planning is the first thing that should be done prior to starting an
investment exercise, because only then will you be in a position to know how
your finances look like, and what is it that you can invest without causing a
strain on yourself. It will also enable you to understand if a particular
investment matches with your flow requirement.
So does it involve looking at future cash flows only? Not really. You should
always do a cash flow for yourself as on date, and you will realize that you
could have a potential savings amount within each month of your working life.
This is the amount that you should look at saving for meeting your financial
goals. The best way of doing this is to have a personal budget.
Page | 35
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Why is cash flow planning important?
Cash flow plans are commonly used by business houses. Without a viable cash
flow plan, a company could easily spend more than its revenue, putting it in
peril. Unfortunately, most of us do not realise that a cash flow plan is as
important for people like us as well. The principles that apply to corporate
finance and to our personal lives are largely the same.
There has never been a bigger need than today for families and individuals to
work out cash flow plans. Without proper cash flow planning one could easily
get caught in the debt trap. Of course, it goes without saying that creating a plan
is not enough. One also needs to implement the plan, besides bringing about a
change in the spending habits.
Cash flow plan brings you face-to-face with what you should ideally be saving,
and investing in a systematic and regular manner, and what would it mean to
you to withdraw from your portfolio after a couple of years. It brings down in
numbers what your financial future has in store for you, and gives a crystal
clear view (as much as is possible with inflation and the interest rate scenario).
Page | 36
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Tax Planning - Introduction
Proper tax planning is a basic duty of every person which should be
carried out religiously. Basically, there are three steps in tax planning
exercise. These three steps in tax planning are:
Calculate your taxable income under all heads ie, Income from Salary, House
Property, Business & Profession, Capital Gains and Income from Other
Sources.
Calculate tax payable on gross taxable income for whole financial year
(i.e.,From 1st April to 31st March) using a simple tax rate table, given on next
page.
After you have calculated the amount of your tax liability. You have two
options to choose from:
1. Pay your tax (No tax planning required)
2. Minimize your tax through prudent tax planning.
Most people rightly choose Option 'B'. Here you have to compare the
advantages of several tax saving schemes and depending upon your age, social
liabilities, tax slabs and personal preferences, decide upon a right mix of
Page | 37
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
investments, which shall reduce your tax liability to zero or the minimum
possible.
Every citizen has a fundamental right to avail all the tax incentives provided by
the Government. Therefore, through prudent tax planning not only income-tax
liability is reduced but also a better future is ensured due to compulsory savings
in highly safe Government schemes. We sincerely advise all our readers and
clients to plan their investments in such a way, that the post-tax yield is the
highest possible keeping in view the basic parameters of safety and liquidity
Page | 38
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
The Need For Insurance Planning
"Insurance is not for the person who passes away, it for those who
survive," goes a popular saying that explains the importance of Insurance
Planning.
It is extremely important that every person, especially the breadwinner, covers
the risks to his life, so that his family's quality of life does not undergo any
drastic change in case of an unfortunate eventuality.
It is extremely important that every person, especially the breadwinner, covers
the risks to his life, so that his family's quality of life does not undergo any
drastic change in case of an unfortunate eventuality.
Insurance Planning is concerned with ensuring adequate coverage against
insurable risks. Calculating the right level of risk cover is a specialised activity,
requiring considerable expertise. Proper Insurance Planning can help you look
at the possibility of getting a wider coverage for the same amount of premium
Page | 39
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
or the same level of coverage for the same amount amount of premium or the
same level of coverage for a reduced premium. Hence, the need for proper
insurance planning.
Insurance, simply put, is the cover for the risks that we run during our lives.
Insurance enables us to live our lives to the fullest, without worrying about the
financial impact of events that could hamper it. In other words, insurance
protects us from the contingencies that could affect us.
So what are the risks that we run? To name a few - the risk on our lives that is,
the worries of replacement of the incomes that we contribute to the running of
the household), the risks of medical contingencies (since they have the
capability of depleting our wealth considerably) and risks to assets (since the
replacement of these can have tremendous financial implications). If we can
imagine a situation where our goals are disturbed by acts beyond our control,
we can realise the relevance of insurance in our lives.
Insurance Planning takes into account the risks that surround you and then
provides an adequate coverage against those risks. There is no risk not worth
insuring yourself against, and insurance should first and foremost be looked as a
measure to guard against risks - the risk of your dreams going awry due to
events beyond your control
Page | 40
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Children's Future Planning
Like every parent, you too must be overjoyed to watch your child grow. All parents want
to give the best possible upbringing to their children. This includes good education and
security, in case of any eventuality. Soon, your little bundle of joy will grow up, and it
will be time to provide for his or her higher education and wedding.
The purpose of Children's Future Planning is to create a corpus for foreseeable
expenditures such as those on higher education and wedding, and to provide for an
adequate security cover during their growing years.
Children's Future Planning acquires added importance because children's education and
wedding are high priority life goals, which can neither be postponed nor can there be a
compromise on the amount.
Good education has always been the passport to a secure future. Today, career
opportunities have grown manifold, and there are many professional course that your
Page | 41
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
child can aspire for. However, costs of higher education have also increased
exponentially.
Like most parents, you might be saving regularly to ensure a safe tomorrow for your
child. However, savings alone is no longer enough. For ensuring adequate funding of
your child's education, you as a parent, need to do two things:
Invest appropriate amount systematically and at regular intervals
Provide for a financial security blanket to cover any eventuality
It is never too early to start saving and investing for your child's future. Especially
in today's context. For example, the cost of a professional degree today is
approximately Rs 2.5 lakhs. If your child is one-year-old today, after 17 years
when he/she goes to college, you may require a sum of Rs 6.3 lakhs, assuming an
annual rate of inflation of 6%.
There are many products which your Financial Planner can use to achieve the above
objectives. For example, he could suggest a Children's Future Plan offered by any good
insurance company, to build a corpus for your child's higher education, and provide for a
security cover in the event of the parent's unfortunate demise.
Children's plans are also available under unit-linked option. Being unit-linked, they offer
access to investments in all kinds of asset classes - equity, debt and cash.
Page | 42
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Retirement Planning
Some like it. Some don’t. But retirement is a reality for every working person.
Most young people today think of retirement as a distant reality.
However, it is important to plan for your post-retirement life if you wish to
retain your financial independence and maintain a comfortable standard of
living even when you are no longer earning. This is extremely important,
because, unlike developed nations, India does not have a social security net.
Retirement Planning acquires added importance because of the fact that though
longevity has increased, the number of working years haven’t.
Page | 43
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Our Retirement Planning Service involves:
Computing that amount that would be required post-retirement. This is
done after taking inflation and time value of money into account.
Building your Retirement Corpus using Systematic Investment Plans
(SIPs) and other long-term growth orient products
Ensuring adequate post-retirement income through safe investments.
The asset allocation and selection of investment vehicles keep changing
as your risk-bearing capacity diminishes.
Page | 44
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Plan for A Worry Free Retirement
In simple words, retirement planning means making sure you will have enough
money to live on after retiring from work. Retirement should be the best period
of your life, when you can literally sit back and relax or enjoy your life by
reaping benefits of what you earn in so many years of hard work. But it is easier
said than done. To achieve a hassle-free retired life, you need to make prudent
investment decisions during your working life, thus putting your hard-earned
money to work for you in future.
Page | 45
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Why is it important?
India, unlike other countries, does not have state-sponsored social security for
the retired people. And after several decades when pensions provided many
people with a large chunk of money they needed to live comfortably after they
retired, things are changing. While you may be entitled to a pension, or income
during retirement, in the new economic era, you are increasingly likely to be
responsible for providing for your own needs.
Although the compulsory savings in provident fund through both employee and
employer contributions should offer some cushion, it may not be enough to
support you throughout your retirement. That is why retirement planning is
extreme ly important for every one.
There are many reasons for the working individuals to secure their future
emergence of nuclear families and its attendant insecurity, increasing
uncertainties in personal and professional life, the growing trends of seeking
early retirement and rising health risks are among few important risks. Besides
falling interest rates and the sustained increase in the cost of living make it a
compelling case for individuals to plan their finances to fund their retired life.
Planning for retirement is as important as planning your career and marriage.
Life takes its own course and from the poorest to the wealthiest, no one gets
Page | 46
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
spared. "Everyone grows older". We get older every day, without realising.
However, we assume that old age is never going to touch us.
The future depends to a great extent on the choices you make today. Right
decisions with the help of proper planning, taken at the right time will assure
smile and success at the time of retirement.
Page | 47
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
PLAN FOR A WORRY FREE RETIREMENT
In simple words, retirement planning means making sure you will have enough
money to live on after retiring from work. Retirement should be the best period
of your life, when you can literally sit back and relax or enjoy your life by
reaping benefits of what you earn in so many years of hard work. But it is easier
said than done. To achieve a hassle-free retired life, you need to make prudent
investment decisions during your working life, thus putting your hard-earned
money to work for you in future.
Page | 48
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Why is it important?
India, unlike other countries, does not have state-sponsored social security for
the retired people. And after several decades when pensions provided many
people with a large chunk of money they needed to live comfortably after they
retired, things are changing. While you may be entitled to a pension, or income
during retirement, in the new economic era, you are increasingly likely to be
responsible for providing for your own needs.
Although the compulsory savings in provident fund through both employee and
employer contributions should offer some cushion, it may not be enough to
support you throughout your retirement. That is why retirement planning is
extreme ly important for every one.
There are many reasons for the working individuals to secure their future
emergence of nuclear families and its attendant insecurity, increasing
uncertainties in personal and professional life, the growing trends of seeking
early retirement and rising health risks are among few important risks. Besides
falling interest rates and the sustained increase in the cost of living make it a
compelling case for individuals to plan their finances to fund their retired life.
Planning for retirement is as important as planning your career and marriage.
Life takes its own course and from the poorest to the wealthiest, no one gets
Page | 49
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
spared. "Everyone grows older". We get older every day, without realising.
However, we assume that old age is never going to touch us.
The future depends to a great extent on the choices you make today. Right
decisions with the help of proper planning, taken at the right time will assure
smile and success at the time of retirement.
Page | 50
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
INVESTMENTS
Mutual Funds are among the hottest favourites with all types of investors. Investing in
mutual funds ranks among one of the preferred ways of creating wealth over the long
term. In fact, mutual funds represent the hands-off approach to entering the equity
market. There are a wide variety of mutual funds that are viable investment avenues to
meet a wide variety of financial goals. This section explains the various aspects of
Mutual Funds.
• What are Mutual Funds?
• Why choose Mutual Funds?
• Types of Mutual Funds
• Snapshot of Mutual Fund Schemes
• Choosing the Right Mutual Fund Scheme
• How to calculate the growth of your Mutual Funds
Investments?
• Points to Remember
• Glossary
What are Mutual Funds ?
A Mutual Fund is a trust that pools together the savings of a number of investors who
share a common financial goal. The fund manager invests this pool of money in securities
-- ranging from shares and debentures to money market instruments or in a mixture of
equity and debt, depending upon the objectives of the scheme.
Page | 51
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Why choose Mutual Funds ?
Investing in Mutual Funds offers several benefits:
•Professional expertise: Fund managers are professionals who track the market on
an on-going basis. With their mix of professional qualification and market
knowledge, they are better placed than the average investor to understand the
markets
•Diversification: Since a Mutual Fund scheme invests in number of stocks and/or
debentures, the associated risks are greatly reduced.
•Relatively less expensive: When compared to direct investments in the capital
market, Mutual Funds cost less. This is due to savings in brokerage costs, demat
costs, depository costs etc.
•Liquidity: Investments in Mutual Funds are completely liquid and can be
redeemed at their Net Assets Value-related price on any working day.
•Transparency: You will always have access to up-to-date information on the
value of your investment in addition to the complete portfolio of investments, the
proportion allocated to different assets and the fund manager’s investment strategy.
•Flexibility: Through features such as Systematic Investment Plans, Systematic
Withdrawal Plans and Dividend Investment Plans, you can systematically invest or
withdraw funds according to your needs and convenience.
Page | 52
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
•SEBI regulated market: All Mutual Funds are registered with SEBI and function
within the provisions and regulations that protect the interests of investors. AMFI
is the supervisory body of the Mutual Funds industry.
Page | 53
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Types of Funds
There are a wide variety of Mutual Fund schemes that cater to your needs, whatever your
age, financial position, risk tolerance and return expectation. Whether as the foundation
of your investment program or as a supplement, Mutual Fund schemes can help you meet
your financial goals. The different types of Mutual Funds are as follows:
Diversified Equity Mutual Fund Scheme
A mutual fund scheme that achieves the benefits of diversification by investing in the
stocks of companies across a large number of sectors. As a result, it minimizes the risk of
exposure to a single company or sector.
Sectoral Equity Mutual Fund Scheme
A mutual fund scheme which focuses on investments in the equity of companies across a
limited number of sectors -- usually one to three.
Index Funds
These funds invest in the stocks of companies, which comprise major indices such as the
BSE Sensex or the S&P CNX Nifty in the same weightage as the respective indice.
Equity Linked Tax Saving Schemes (ELSS)
Mutual Fund schemes investing predominantly in equity, and offering tax deduction to
investors under section 80 C of the Income Tax Act. Currently rebate u/s 80C can be
Page | 54
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
availed up to a maximum investment of Rs 1,00,000. A lock-in of 3 years is mandatory.
Monthly Income Plan Scheme
A mutual fund scheme which aims at providing regular income (not necessarily monthly,
don't get misled by the name) to the unitholder, usually by way of dividend, with
investments predominantly in debt securities (upto 95%) of corporates and the
government, to ensure regularity of returns, and having a smaller component of equity
investments (5% to 15%)to ensure higher return.
Income schemes
Debt oriented schemes investing in fixed income securities such as bonds, corporate
debentures, Government securities and money market instruments.
Floating-Rate Debt Fund
A fund comprising of bonds for which the interest rate is adjusted periodically according
to a predetermined formula, usually linked to an index.
Gilt Funds - These funds invest exclusively in government securities.
Balanced Funds
The aim of balanced funds is to provide both growth and regular income as such schemes
invest both in equities and fixed income securities in the proportion indicated in their
offer documents. They generally invest 40-60% in equity and debt instruments.
Fund of Funds
Page | 55
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
A Fund of Funds (FoF) is a mutual fund scheme that invests in other mutual fund
schemes. Just as fund invests in stocks or bonds on your behalf, a FoF invests in other
mutual fund schemes.
Mutual
Fund
Type
Objective Risk Investment
Portfolio
Who should
invest
Investment
horizon
Money
Market
Liquidity +
Moderate
Income +
Reservation of
Capital
Negligible
Treasury Bills,
Certificate of
Deposits,
Commercial
Papers, Call
Money
Those who
park their
funds in
current
accounts or
short-term
bank deposits
2 days - 3 weeks
Short-
term
Funds
(Floating -
short-
term)
Liquidity +
Moderate
Income
Little Interest
Rate
Call Money,
Commercial
Papers,
Treasury Bills,
CDs, Short-
term
Government
securities.
Those with
surplus
short-term
funds
3 weeks -
3 months
Bond
Funds
Regular Income Credit Risk &
Interest Rate
Predominantly
Debentures,
Salaried &
conservative
More than 9 - 12
months
Page | 56
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
(Floating -
Long-
term)
Risk
Government
securities,
Corporate
Bonds
investors
Gilt FundsSecurity &
Income
Interest Rate
Risk
Government
securities
Salaried &
conservative
investors
12 months & more
Equity
Funds
Long-term
Capital
Appreciation
High Risk Stocks
Aggressive
investors with
long term out
look.
3 years plus
Index
Funds
To generate
returns that are
commensurate
with returns of
respective
indices
NAV varies
with index
performance
Portfolio
indices like
BSE, NIFTY
etc
Aggressive
investors.3 years plus
Balanced
Funds
Growth &
Regular Income
Capital
Market Risk
and Interest
Rate Risk
Balanced ratio
of equity and
debt funds to
ensure igher
returns at lower
risk
Moderate &
Aggressive2 years plus
How to choose the right Mutual Fund scheme
Page | 57
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Once you are comfortable with the basics, the next step is to understand your investment
choices, and draw up your investment plan relevant to your requirements. Choosing your
investment mix depends on factors such as your risk appetite, time horizon of your
investment, your investment objectives, age, etc.
What should be kept in mind before investing in Mutual Funds ?
Mutual Fund investment decisions require consistent effort on the part of the investor.
Before investing in Mutual Funds, the following steps must be given due weightage to
decide on the right type of scheme:
1. Identifying the Investment Objective
2. Selecting the right Scheme Category
3. Selecting the right Mutual Fund
4. Evaluating the Portfolio
A) Identifying the Investment Objective
Your financial goals will vary, based on your age, lifestyle, financial independence,
family commitments, level of income and expenses, among many other factors.
Therefore, the first step is to assess you needs. Begin by asking yourself these simple
Page | 58
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
questions:
Why do I want to invest?
The probable answers could be:
•"I need a regular income"
•"I need to buy a house/finance a wedding"
•"I need to educate my children," or
•A combination of all the above
How much risk am I willing to take?
The risk-taking capacity of individuals vary depending on various factors. Based on their
risk bearing capacity, investors can be classified as:
•Very conservative
•Conservative
•Moderate
•Aggressive
•Very Aggressive
To ascertain your risk appetite, try out our Risk Thermometer.
What are my cash flow requirements?
Page | 59
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
For example, you may require:
•A regular Cash Flow
•A lumpsum after a fixed period of time for some specific need in the future
•Or, you may have no need for cash, but you may want to create fixed assets for
the future
B) Selecting the scheme category
The next step is to select a scheme category that matches your investment objectives:
•For Capital Appreciation go for equity sectoral funds, equity diversified funds or
balanced funds.
•For Regular Income and Stability you should opt for income funds/MIPs
•For Short-Term Parking of Funds go for liquid funds, floating rate funds, short-
term funds.
•For Growth and Tax Savings go for Equity-Linked Savings Schemes.
Investment
Objective
Investment
horizonIdeal Instruments
Short-term
Investment1- 6 months Liquid/Short-term plans
Capital
AppreciationOver 3 years
Diversified Equity/ Balanced
Funds
Page | 60
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Regular Income FlexibleMonthly Income Plans /
Income Funds
Tax Saving 3 yrs lock-inEquity-Linked Saving
Schemes (ELSS)
C) Selecting the right Mutual fund
Once you have a clear strategy in mind, you now have to choose which Mutual fund and
scheme you want to invest in. The offer document of the scheme tells you its objectives
and provides supplementary details like the track record of other schemes managed by
the same Fund Manager. Some important factors to evaluate before choosing a particular
Mutual Fund are:
The track record of performance over that last few years in relation to the appropriate
yardstick and similar funds in the same category.
How well the Mutual Fund is organized to provide efficient, prompt and personalized
service.
The degree of transparency as reflected in frequency and quality of their
communications.
D) Evaluation of portfolio
Evaluation of equity fund involve analysis of risk and return, volatility, expense ratio,
fund manager’s style of investment, portfolio diversification, fund manager’s experience.
Page | 61
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Good equity fund should provide consistent returns over a period of time. Also expense
ratio should be within the prescribed limits. These days fund house charge around 2.50%
as management fees.
Evaluation of bond funds involve it's assets allocation analysis, return's consistency, it’s
rating profile, maturity profile, and it’s performance over a period of time. The bond fund
with ideal mix of corporate debt and gilt fund should be selected.
Page | 62
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
How to calculate the growth of your Mutual Fund investments ?
Let's assume that Mr. Gupta has purchased Mutual Fund units worth Rs. 10,000 at an
NAV of Rs. 10 per unit on February 1. The Entry Load on the Mutual Fund was 2%. On
September 15, he sold all the units at an NAV of Rs 20. The exit load was 0.5%.
His growth/ returns is calculated as under:
1. Calculation of Applicable NAV and No. of units purchased:
(a) Amount of Investment = Rs. 10,000
(b) Market NAV = Rs. 10
(c) Entry Load = 2% = Rs. 0.20
(d) Applicable NAV (Purchase Price) = (b) + (c) = Rs. 10.20
(e) Actual Units Purchased = (a) / (d) = 980.392 units
2. Calculation of NAV at the time of Sale
(a) NAV at the time of Sale = Rs 20
(b) Exit Load = 0.5% or Rs.0.10
(c) Applicable NAV = (a) – (b) = Rs. 19.90
3. Returns/Growth on Mutual Funds
Page | 63
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
(a) Applicable NAV at the time of Redemption = Rs. 19.90
(b) Applicable NAV at the time of Purchase = Rs. 10.20
(c) Growth/ Returns on Investment = {(a) – (b)/(b) * 100} = 95.30%
Points to Remember
•Do not speculate: Always evaluate risk-taking capacity.
•Do not chase returns: Because what goes up must come down.
•Do not put all eggs in one basket: Diversification reduces the risk.
•Do not stop working on Mutual Funds: Continuous evaluation of funds is a
must.
•Do not time the market: Every time is good for investments.
•Mutual Funds are subject to market risks and there is no assurance that the fund
objective will be achieved.
•NAVs fluctuate depending on forces affecting the Capital market.
•Past performance may or may not be sustained in the future.
Assets Management Company: A highly regulated organization that pools money from
many people into portfolio structured to achieve certain objectives. Typically an AMC
manages several funds –open ended/ close ended across several categories- growth,
income, balanced.
Balanced Fund: A hybrid portfolio of stocks and bonds.
Page | 64
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Close Ended Fund: They neither issue nor redeem fresh units to investors. Some closed
ended funds can be bought or sold over the stock exchange if the fund is listed. Else,
investor have to wait till redemption date to exit. Most listed close ended funds trade at
discount to the NAV.
Open Ended Fund: A diversified and professionally managed scheme, it issues fresh
units to incoming investors at NAV plus any applicable sales charge, and it redeems
shares at NAV from sellers, less any redemption fees.
Entry/ Exit Load: A charge paid when an investor buys/sells a fund. There could be a
load at the time of entry or exit, but rarely at both times.
Expense Ratio : The annual expenses of the funds, including the management fee,
administrative cost, divided by the fund under management.
Growth/Equity Fund: A fund holding stocks with good or improving profit prospects.
The primary emphasis is on appreciation.
Liquidity: The ease with which an investment can be bought or sold. A person should be
able to buy or sell a liquid asset quickly with virtually no adverse price impact.
Net Assets Value : A price or value of one unit of a fund. It is calculated by summing the
current market values of all securities held by the fund, adding the cash and any accrued
Page | 65
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
income, then subtracting liabilities and dividing the result by the number of units
outstanding.
Interest Rate Risk: The risk borne by fixed-interest securities, and by borrowers with
floating rate loans, when interest rates fluctuate. When interest rates rise, the market
value of fixed-interest securities declines and vice versa.
Credit Risk: Credit risk involves the loss arising due to a customer’s or counterparty’s
inability or unwillingness to meet commitments in relation to lending, trading, hedging,
settlement and other financial transactions.
Capital Market Risk : Capital Market Risk is the risk arising due to changes in the
Stock Market conditions.
Page | 66
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
INTRODUCTION
Investment options
1. Insurance
2. PPF- Public provident fund
3. NSC- National Saving Certificate
4. Post Office Saving schemes
5. Mutual fund
6. Bank Saving Schemes
7. Securities
8. Real Estate
Page | 67
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
RE SEARCH O BJECTIVE
This research was undertaken with the following scope of work:
• To know the current strategy of investment.
• To know why salaried employees do investment {need of investment}.
• To know when they invest.
• To know where they prefer to invest.
• To identify the whether they are aware about the Tax structure.
• To give suggestion related to their investment strategy.
Page | 68
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
DEFINITIONS OF INVESTMENT
• Investing: the act of investing; laying out money or capital in an
enterprise with the expectation of profit
• Money that is invested with an expectation of profit
• The use of money for the purpose of making more money, to gain income
or increase capital, or both.
• The use of money through various vehicles, or an individual's time and
effort, to make more income or increase capital, or both. The term
"investment" infers that the safety of principal is important. On the other
hand, speculation connotes that risking principal is acceptable
• Anything of value purchased to provide capital appreciation and/or
income. Examples include stocks, bonds, mutual funds, unit investment
trusts, certificates of deposit, money market funds and collectibles.
Investments may also include artwork, antiques and real estate.
But why do we save and then invest our savings somewhere?
The answer seems to be too simple. We save to earn more money.
We always invest for a specific purpose. For instance, we invest in life
insurance to save on taxes. We put money into recurring deposits to, say, part-
finance the down payment for a house. We invest for our children’s education,
Page | 69
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
for their imminent weddings. We also invest to take care of our own needs after
retirement.
Page | 70
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Motives for investment may vary, but there are some common desires. people
want investments to give some return.
• Safety
• Liquidity
• Returns
We have to use these criteria to assess our investment needs.
For instance, if people want to put away money for retirement, safety will be
the most important criterion. A safe investment avenue that gives people a
decent annual return will be good enough for people. What about the money
their father sent people for the down payment on their car? People haven’t even
decided on the model! People’ll probably keep the money in their savings bank
account so that people can withdraw it quickly.
At different stages of life their needs for financial security and plans for the
future are likely to change. Here is a simple introduction to common financial
needs as they relate to different lifestyles and life stages.
Protection
Page | 71
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Families with peopling, dependent children need adequate protection against
losing their primary wage earner's income if and when premature and
unexpected death occurs.
Page | 72
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
1. Emergency Fund
Life insurance provides an additional consideration by providing an emergency
fund to provide money for survivors. It buys the time so essential and necessary
that is needed to adjust to the death of a parent or spouse.
1. Education
Yet another priority need for peopling families is building adequate funds for
higher education costs. The need for highly specialized education is greater than
ever before.
Every year, the cost of education rises beyond estimated limits.
Page | 73
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
2. Retirement
Peopling families should also plan for retirement in the long run. Investment
and pension plans are not adequate to fund the retirement needs at times. Once a
family attains a specific standard of living, it is very hard to adjust to a reduced
standard during the retirement years.
Systematic savings over a working lifetime is the key towards supplementing
other retirement programmes. The old rule of saving 10 percent of the annual
income still holds true for single income peopling families. Peopling families
with modest incomes must commence with at least a 10 percent guideline if
they cannot make a total commitment immediately.
3. Disability
A single income peopling family would be in an extremely perilous situation if
there would be a loss of income owing to a disability. In case an income
provider is unable to work, the economic consequences could be severe for the
family. Not only does the family have to maintain the established standard of
living, it also has to shoulder the additional burden of a disabled member within
itself. Disability is the major need that is to be addressed and protection against
this loss is a priority.
Page | 74
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Tax Planning
Generally speaking, after a decade of their marriage their family would be
complete. People should look at tax planning in a more serious manner. It is
time to plan for some investments and funds in the names of minor children and
to take some insurance policy in the name of minor children for their education
and marriage purposes. This should be a long-term policy with a small amount
of premium payment year after year
The needs of mature adults tend to emphasis on their successors as well as their
elders. These generally include:
• Providing funds for higher specialized studies for their children.
• Assisting their children with payments on their new homes.
• Loaning or granting money by way of gifts to other needy family
members or relatives.
• Ensuring health care and attention for their aged and dependent parents.
• Planning for a dependent who might have specific needs.
• Guaranteeing loans and financial obligations for their children.
Page | 75
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
• Building a savings fund to provide additional income during retirement.
Marriage and Education Costs
The cost of marriage and higher education for children forms a major expense
during the mature adult's life cycle. The costs of living increase year after year.
And to meet these rising costs requires sacrifice and considerable effort on the
part of most families.
The cost of higher education is also rising. More and more students are opting
to go abroad to seek specialization in their chosen vocation. Foreign universities
are also offering a wide range of specialized courses on Indian This makes a
college education highly desirable. Yet, as the costs go on mounting, it makes
planning all the more essential to make the education a reality.
Page | 76
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Children's First Home
Since costs of housing have to be met with a large percentage from our
incomes, newly married couples are finding it harder than ever before to pay the
minimum down payment or even acquire the necessary resources to qualify for
housing finance. Needless to say, these peopling couples need their parents'
help for providing the necessary funds.
When a peopling couple applies for a loan, they should purchase dual-life
insurance policies, naming their parents as beneficiaries. If by chance, the
couple expires before the housing loan is paid off, the proceeds of the policy
can easily suffice in meeting the repayment installments.
In case the couple lives happily ever after, the cash value in the policies can be
used to pay off the remainders of the loan after a while. The tax advantages
offered are extremely advantageous for the peopling couple and their parents.
Many other financial options are available, but the flexibility offered by life
insurance policies is unmatched by any of them.
Gifts and Loans
Adults in their mature years are usually confronted with financial demands from
generations proceeding as well as succeeding them.
Page | 77
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Providing funds for children, elderly parents, or relatives, either as a loan or an
outright gift, may create a change in the financial planning considerations.
Page | 78
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Caring for Dependent Parents
Not many people anticipate that as their children mature and gain
independence, they might be confronted by new dependents - their own parents.
Since these people are responsible for their children as well as their elderly
parents, they subsequently get 'sandwiched' between the expenses of both the
generations’.
.A family 'sandwiched' between the pressures of two generations is subjected to
a lot of emotional and financial strain. Difficulties arise from balancing the
needs of parents and shouldering their children's responsibility besides
concentrating on personal financial goals. The only solution lies in planning in
advance for the risks covered. People who anticipate and prepare for the worst
can afford to make choices later on in life.
Long Term Care
Long term care insurance is yet another major planning consideration. Medical
assurance policies are not always adequate. They can never meet the
catastrophic costs of a major illness or a chronic disability. Not many people
can afford the large expenses of nursing homes with their current income.
Page | 79
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
If matured adult parents are unable to afford this coverage, it makes sense for
their children to share the premium expenditure. This is a sensible precaution to
be exercised against any potentially high costs that might occur later. When the
time period for future health planning is over, the options available for the
elderly are fewer and extremely unattractive.
If a parent's health goes from bad to worse and they become completely
dependent on external help, the medical costs may be higher than the income
level of the family, regardless of how willing they might be.
Dependents with Special Needs
Just like elderly parents, children who are physically or mentally handicapped
require special consideration and are a source of major and expensive concern.
A provision for their needs must be considered and plans made as early as
possible. Needless to say, the dependency period never ends with these
dependents.
Providing necessary care for dependents having special needs can be extremely
strenuous, both emotionally and financially. At times, people who are caring for
the disabled sacrifice their own health and financial security at the expense of
the other members of the family. The emotional pull generated can create a
terse atmosphere within the household.
Page | 80
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Parents of a dependent with special needs wish to see that these expenses are
taken care of on a long-term and guaranteed basis. With timely and proper
planning, such expenses can be met easily regardless of what happens to the
provider of support.
Page | 81
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Tax Planning
Once their children are grown up and settled in life, most of their responsibility
towards them is over. It is now time to relax. Now people should plan their
investment strategies in such a manner that the income in their family group is
distributed from the point of view of tax planning, not merely in their name and
that of their spouse but in the names of their son, their daughter-in-law and their
grand children. People should also now start focusing on the investment
decisions which will have a long-term repercussion relating to their succession.
Thus, it is recommended to people that they should prepare their Will and adopt
tax planning relating to the wills and achieve ultimate tax saving for family
members who are going to be a part of their succession plan.
Adulthood -The Middle Years 51 – 55
Middle years are the stage in the life cycle identified and characterized as a
period of acquisition and establishment. People at this phase of life, assume
more responsibility and often take on new career opportunities.
Middle-aged people are constantly making commitments, acquiring assets
and incurring additional debts as well. This phase in the human life cycle
Page | 82
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
develops the individual's long-term and ongoing relationships more than the
others.
Page | 83
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Challenging Concerns
People, in their middle years are assuming greater responsibilities as well as
acquiring newer assets and possessions. Growth means change wrought
together with new challenges and added concerns.
People have to consequently face a lot of problems and considerations
during this stage of their life cycle. They may be trying to achieve their aims
in life, their aspirations and dreams ranging from a proper balance between
their careers and family life to a continual movement up the career ladder.
They will also seek proper protection of their income levels in event of a
disability, or a loss of job or a career change and even premature unexpected
death. They may also be considering investing in better residential facilities
with realistic provisions made for their retirement needs and financial
security. Budgetary changes may also be implemented along with long-term
savings and investment plans. They might also be updating their wills and
bequests.
Since different people use different approaches in meeting their mid-life
crises and challenges, they are highly prone to make financial mistakes and
errors of judgment. A miscalculation at this stage can affect an individual's
financial standing for the rest of his life.
Page | 84
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
The most common mistake made by individuals during their middle age
periods is probably procrastination or delay in the commencement of
programs for future needs. The benefits of compounded interest are lost
forever owing to this single greatest failure. Another mistake people tend to
commit is making inadequate estimates or judgments regarding the amount
of protection needed for their future.
The other common errors on people's part are concurrent to the fact that
people tend to overuse and at times, even abuse their credit limits. They
blindly accept investment strategies or plans newly introduced in the market.
Also they fail to provide for pending major purchases or replacement of
large-sized utilitarian items.
They also tend to neglect in protecting or covering their property assets
while continue to rely on their employment-sponsored benefits. At times,
people forget that inflation will catch up with them and make inadequate
provisions for their retirement.
Page | 85
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Hopes and Dreams
An individual seeking to fulfill their aspirations should base his game plan
with specific objectives estimated on his resources and working capacity. As
long as the individual maintains the following perspectives in mind, his
chances of success are assured:
• Clearly defined goals and objectives.
• Controlled spending with the budget.
• Planned savings and investment program.
• Adequate funds for children's higher education.
• Protection against property losses.
• Sufficient income against disability.
• Emergency fund.
• Financial independence and a comfortably secure retirement.
• General well being and peace of mind.
Page | 86
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Tax Planning
Their tax planning should now be such that people have no hassles and tensions
in these golden years. Their aim should be to have an easy flow of money from
their investments. The thrust should be on safety of their capital as against
higher returns. Their focus should be only on 100% safe and secured
investments. Try to have a joint bank account and joint investments which will
help smooth succession in the years to follow. Their tax planning should now
be in such a manner that people are required to spend less time managing their
affairs and have more time available for their personal pursuits.
INTRODUCTION TO INSURANCE
The word insurance is an under writing by a company, society or the state to
provide or safeguard against loss provision, against sickness, death etc in return
for regular payment i.e. premium.
In other words insurance is such a method, which provides security and
fearlessness to the human being. It is a mean for shifting the risks to insurer in
consideration of a nominal cost which is called as premium.
Insurance is a cooperative device to spread the loss cause by a particular risk
over a member of persons who are exposed to it and who agree to insure
themselves against the risks. There are risk of outbreak, fire, cyclone,
Page | 87
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
earthquake, floods, accidents and deaths etc. According to A.H. WHILET; risk
is an objectified uncertainty regarding the occurrence of an undesirable event.
Insurance is a cooperative method for spreading over the loss suffered by one or
more, caused by a particular risk, over a no. of persons who agree to share the
loss. By insurance a person can protect himself and his dependents from loss
arising from future uncertain events like fir, accidents, early death and so on.
Page | 88
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
DEFINITION OF INSURANCE
“Insurance is a cooperative form of distributing a certain risk over a group of
persons who are exposed to it.”
(GHOSH AND AGARWAL)
“Insurance is a contract in which a sum of money is paid to the assured in
consideration of insurer’s incurring the risk of paying to a large sum upon a
given contingency”
(JUSTICE TINDALL)
“Insurance is a contract by which one party for a compensation called in the
premium assumes particular risk of the other party and promises to pay to him
or his nominee a certain or a certain able sum of money on a specified
contingency.”
(E.W. FITTERSON)
Page | 89
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
CLASSIFICATION OF INSURANCE
Insurance business can be divided into two broad categories – Life insurance &
general insurance
1) GENERAL INSURANCE
The general insurance includes property insurance, liability insurance &
other forms of insurance. Fire and marine insurance are strictly called
property insurance. Motor, fidelity and machine insurance include the extent
of liability insurance to a certain extent.
• Property insurance- Under the property insurance, property of
the person is insured against a specified risk.
• Fire insurance- Hence the policy holder is assured of any loss
to the property by fire.
Page | 90
Types of Insurance
Life Insurance General Insurance
Marine Fire Miscellaneo
us
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
• Liability insurance- In this insured is liable to pay the
damages of property or to compensate the loss of personal
injury or death.
Page | 91
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
2) LIFE INSURANCE
It is different from other forms of insurance in the sense that the subject
matter of insurance is life of human being.
Insurance on one’s life is taken and assured sum is payable on maturity or
the assured or his nominee on maturity or death in consideration of premium
paid by the assured. At present, life insurance enjoys maximum scope because
the life is the most important property of the society or an individual. Life
insurance provides protection to the family at the premature death or gives
adequate amount to the old age when earning capacities are reduced. Under
personal insurance a payment is made at the accident. The insurance is not only
a protection but is a sort of investment.
Personal Insurance includes Life Accident, Health and Sickness Insurances.
• Accident Insurance- Personal Accident Policy provides for
specific benefit to the assured, suffering injury in any accident resulting ion
death or disablement. The compensation payable but the insurer is dependent
upon the extent of physical loss or injury.
Page | 92
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
INTRODUCTION TO LIFE INSURANCE
Life Insurance contract may be defined as the contract, whereby the
insurer in consideration of a premium undertakes to pay a certain sum of
money either on the death of the insured or on the expiry of a fixed period.
Insurance has described as an institution, which eliminates risk and substitute
certainty for uncertainty. It is the certainty of death inherent in the life which
gives rise to the necessity for some form of protection against the loss arising
from death. The breadwinner of the family more often than not depens a family
for its food, clothing and shelter on the income benefit in at regular intervals. So
long as he lives and the income is received steadily that family is secured but
should death suddenly intervene the family may be left in very straitened
circumstances and some time in stark poverty.
Page | 93
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
HISTORY OF LIFE INSURANCE
Over 5000 year ago in china insurance was seen as a preventative measure
against piracy on the sea. Piracy in fact so prevalent that as a way of spreading
the risk a number of ship would carry a portion of another ship’s cargo so that if
one was captured the entire shipment would not be lost.
In another part of the world nearly 4,500 year ago in the ancient land of
Babylonia trader use to bear risk of the caravans trade by giving loan that have
to be later repaid with interest when the good arrive safely. In 2100BC the code
of Hammurabi granted legal status to the practice .it formulized concept of
“bottormy” referring to vessel bottom and “recondition” referring to cargo.
These provide the underpinning for marine insurance contracts. Such contracts
contain three elements. A loan on the vessel, cargo, or freight, an interest rate
and a surcharge to cover the possibility of loss. In effect ship owners were
insured and lenders were the underwriters.
Life insurance come out a little later in ancient Rome were burial clubs were
form to cover the funeral expenses of its members, as well as help survivors
monetarily. With Rome’s formed around 450 A.D, most of the concept of
insurance were abandoned, but aspect of it did continue through the middle age,
particularly the merchant artisan guilds. This provide forms of member
Page | 94
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
insurance covering risk like fire , flood , disability , death theft and even
imprisonment.
During the feudal period early forms of insurance ebbed with the decline of
travel and long distance trade. But during the 14th and 16th centuries,
transportation, commerce and insurance would again reemerge.
Insurance in India can be traced back to the Vedas. For instance, yogakshema,
the name of life insurance Corporation of India’s corporate headquarters, is
derived from a Rig Veda. The term suggests the form of “community
insurance” was prevalent in 1000BC and practice by the Aryans.
Page | 95
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
IMPORTANCE OF LIFE INSURANCE
The purpose of life insurance is to safe guard the interest of people from
uncertainly by providing certainty of payment at a given contingency. the
insurance principle has become all the more useful in modern affairs. The rule
and importance of insurance discussed as below:
• LIFE INSURANCE ENCOURAGE SAVINGS
Systematic savings is possible because regular premium are required to
be compulsorily paid. Unlike bank deposits the deposited the insurance
premium can not be withdrawn. Life insurance is the best media of saving.
• LIFE INSURANCE PROFITABLE INVESTMENT
The elements of investment i.e. regular savings capital formation and return
of the capital are observed in the life insurance, In India the insurance
policies; carry a special exemption from income tax and estate duty.
• LIFE INSURANCE FULFIL THE NEED OF A
PERSON
The need of a person may be divided into:
i) Old age needs;
ii) Re –adjustment needs, and
iii) Family needs.
iv) Special needs including needs for education,
Page | 96
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
marriage settlement of children, etc.
Page | 97
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
ADVANTAGES OF LIFE INSURANCE
The following are the advantages of life insurance:-
• SUPERIOR SAVING PLANS
Life insurance is superior to other forms of saving because, unlike other
savings plans, it affords full protection against risk of death. In case of death,
the full sum assured is made available under a life assurance policy, whereas
under other savings schemes the total accumulated saving alone will be
available.
• TAX BENEFIT
The Indian income Tax Act allows deduction of certain portion of taxable
income of individual or Hindu Undivided Families for computing Income
Tax which is diverted to payment of life insurance premiums. Taking this
tax benefits into account the assured is in effect paying lower premiums for
his insurance.
• INVESTMENT ELEMENT
In life insurance, the insured is required to pay the premiums the premiums
is a kind of investment. This premium is returned to the insured along with
additional bonus amount after the expiry of the period of contract.
• REDUCES FINANCIAL BURDEN
Page | 98
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Life insurance reduces financial burden by providing money for children,
marriage of daughter, build a house or starting business after retirement, etc.
Page | 99
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
THE ACT OF INSURANCE
There are three acts of insurance :
• Insurance act.
• LIC Act.
• IRDA Act.
INSURANCE ACT, 1938
Insurance act 1938 was the first comprehensive legislation in India to regulate
the business of insurance when it was found that the earlier Indian company act
failed to meet the purpose. It was way back in 1912,when the Indian life
insurance companies act and provident fund insurance societies act 1912 was
passed , which was further modified and a new legislation was passed in 1928.
in 1938 the insurance act was passed, which aimed to consolidate and amend
the law relating to the business of insurance. The act came into force with effect
from july, 1939. in 1950, certain changes were effected in order to limit the
expenses and control the investments. The nationalization of the insurance
business, the insurance act was through the IRDA Act 1999.
Page | 100
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
LIC ACT, 1956
The Life Insurance Corporation Act, 1912 was the first legislation for
regulating insurance business in India. However the Insurance Act, 1912 was
replaced by comprehensive Insurance Act of 1938. This Act was again
amended in 1950.
Finally the Government of India nationalized the entire life insurance business
in the year 1956 by passing Life Insurance Corporation Act, 1956 and as such
LIC was setup on 1st September, 1956. The LIC took over the assets and
liabilities of 245 insurers which were operating at the time to nationalization.
IRDA ACT, 1999
After the economic crisis of 1991, the Narsimha Rao led Government adopted
the policy of deregulating all the sectors including the insurance sector from the
clutches of the Government and thereby promote the private players to prove
their worth. In this sequence in April, 1993 the Government of India appointed
the Malhotra Committee, to recommend on the reforms on insurance sector,
under the chairmanship of Sri. R.N.Malhotra, former Governor of RBI.
The Committee submitted its report on 7th January, 1994 and made
recommendations for the establishment of on effective Insurance Regulatory
Authority (IRA) in the form of a statutory autonomous board, and also
recommended for the entry of private sector in insurance business.
Page | 101
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
In December 1996, Government tabled the IRA Bill in the parliament but due to
strong opposition form left parties the Government was forced to withdraw IRA
Bill in parliament.
Page | 102
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
IRDA
Under the provision of the insurance Act, 1938 an institution of the controller of
the insurance was set up to act as a strong and powerful supervisory and
regulatory Authority. After the nationalization of the life insurance industry in
1956 and general insurance industry in 1972, the role of controller of insurance
had diminished in significance. The government of India in April 1993 set up a
high power committee to examine the structure of the insurance industry and
recommended changes to make it more efficient and competitive. The
committee submitted its report on 7th January, 1994 and expressed the view that
the insurance regulatory apparatus should be activated even in the existing set
up of nationalized insurance sector. It recommended for the establishment of a
strong and effective Insurance Regulatory Authority in the form of statutory
autonomous board. The recommendations of the committee were discussed at
different forums. It was widely supported that an autonomous Insurance
Regulatory Authority be set up. In view of this the government decided to bring
in legislation to establish an independent regulatory authority for insurance
industry.
In order to provide better insurance coverage to the citizens and also to augment
the flow of long term resources for financing infrastructure , in the budget
Page | 103
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
speech 1998 the policy of the government was announced to open up the
insurance sector and also to establish a statutory Regulatory Authority .
According the insurance Regulatory Authority Bill 1998 was introduced in the
Lok Sabha or 15th December 1998. The bill was referred to the standing
committee suggested some amendments which were accepted by government.
However the bill could not be taken up consideration on the dissolution of the
Lok Sabha. A fresh bill titled Insurance Regulatory and Development Authority
bill was introduced in the parliament.
Page | 104
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
DUTIES, POWERS AND FUNCTIONS OF IRDA:
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of
IRDA:
• Subject to the provision of this act and any other law for the time being in
force. The authority shall have the duty to regulate, promote and ensure
orderly growth of the insurance business and reinsurance business.
• Without prejudice to the generality of the provision contain in the sub –
section.
• Issue to the applicant a certificate of registration , renew ,modify ,
withdraw , suspend or cancel such registration .
• Specifying requisite qualification , code of conduct and practical tanning
for intermediary or insurance intermediaries and agents.
• Specifying the code of conduct for surveyors and loss assessors.
• Promoting efficiency in the conduct of insurance business.
• Promoting and regulating professional organization connected with the
insurance and reinsurance business.
• Levying fees and other charges for carrying our the purpose or this act.
Page | 105
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
• Specifying the form and manner in which books of insurer and other
insurance intermediaries shall maintain account .
• Regulating investment of funds by insurance companies.
• Regulating maintenance of martin of solvency.
• Adjudication of disputes between insurers and intermediaries or insurance
intermediaries.
• Supervision the functioning OF THE Traffic Advisory Committee.
• Specifying the percentage of premium income of the insurer to finance
schemes for promoting and regulating professional organization referred to
in clause.
• Specifying the percentage of life insurance business and general insurance
business to be undertaken by the insurer in the rural or social sector.
• Exercising such other powers as many be prescribed.
The power and function mentioned above would enable the Authority to
perform the role of an effective watchdog and regulator for the insurance sector
in India. To enable the Authority to function in a truly independent manner and
discharges its assigned responsibilities effectively, it is proposed to vest the
Authority with statutory status.
Page | 106
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Page | 107
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
RESEARCH METHODOLOGY
RESEARCH DESIGN: Descriptive Research Design
SAMPLE DESIGN : Probability Sampling – Stratified Sampling, Employees
are divided into three strata on the basis of their age
a) Employees of age group 40 to 45 (120 employees)
b) Employees of age group 46 to 50 (80 employees)
c) Employees of age group 51 to 55 (40 employees)
SAMPLING UNIT: Salaried Employees
SAMPLE SIZE: Sample of 240 Salaried employees is chosen.
METHOD OF DATA COLLECTION
PRIMARY DATA
1. Interview Method: personal interview involve asking questions in face to
face contact.
Page | 108
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
2. Questionnaire: It is the most popular and common instrument used in
research .The basic objective of questionnaire was to collect adequate
information.
Page | 109
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
SECONDARY DATA
1. Internet Search www.google.com
2. Publish material
3. Books Direct Taxes Law & Practice
Tax Planning
PROCESSING OF DATA
Different techniques are used for processing
Editing to detect errors and omit it
Classification to reduce the data into homogenous groups
Tabulation to arrange it into concise and logical order
ANALYSIS OF DATA
Data collected through above method has been analyzed statistically.
Result of analysis is shown in the form of Bar Chart
Page | 110
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
WHERE DO YOU SERVICE IN PUBLIC SECTOR OR PRIVATE
SECTOR
0
10
20
30
40
50
60
70
80
90
40 - 45 age 46 - 50 age 51 - 55 age
Public Sector Private Sector
INFERENCES
• SALARIED EMPLOYEE OF AGE GROUP 40 TO 45
70% said they are working in Private Organization
30% said they are working in Public Organization
• SALARIED EMPLOYEE OF AGE GROUP 46 TO 50
80% said they are working in Private Organization
20% said they are working in Public Organization
Page | 111
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
• SALARIED EMPLOYEE OF AGE GROUP 51 TO 55
90% said they are working in Private Organization
10% said they are working in Public Organization
Page | 112
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
YOUR MONTHLY SALARY
0
10
20
30
40
50
60
70
80
90
40 - 45 age 46 - 50 age 51 - 55 age
Rs. 10 - 20,000 Rs. 21 - 30,000
Rs 31 - 35,000
INFERENCES
• SALARIED EMPLOYEE OF AGE GROUP 40 TO 45
60% said their monthly salary is Rs.10,000 to 20,000
30% said their monthly salary is Rs.21,000 to 30,000
10% their monthly salary is Rs.31,000 to 35,000
• SALARIED EMPLOYEE OF AGE GROUP 46 TO 50
20% said their monthly salary is Rs.10,000 to 20,000
Page | 113
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
70% said their monthly salary is Rs. 21,000 to 30,000
10% said their monthly salary is Rs. 31,000 to 35,000
• SALARIED EMPLOYEE OF AGE GROUP 51 TO 55
5% said their monthly salary is Rs.10,000 to 20,000
90% said their monthly salary is Rs. 21,000 to 30,000
5% said their monthly salary is Rs. 31,000 to 35,000
Page | 114
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
YOUR ANNUAL SAVING
0
10
20
30
40
50
60
70
40 - 45 age 46 - 50 age 51 - 55 age
Rs. 1 - 150,000 Rs. 1.5 - 2,00,000 Rs 2 - 250,000
INFERENCES SALARIED EMPLOYEE OF AGE GROUP 40 TO 45
60% said their annual saving is Rs.1.0 lac. to 1.5 lac.
30% said their annual saving is Rs.1.5 lac. to 2.0 lac.
10% said their annual saving is Rs.2.0 lac. to 2.5 lac.
• SALARIED EMPLOYEE OF AGE GROUP 46 TO 50
20% said their annual saving is Rs.1.0 lac. to 1.5 lac.
70% said their annual saving is Rs.1.5 lac. to 2.0 lac.
10% said their annual saving is Rs.2.0 lac. to 2.5 lac.
Page | 115
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
• SALARIED EMPLOYEE OF AGE GROUP 51 TO 55
100% said their annual saving is Rs.1.0 lac. to 1.5 lac.
40% said their annual saving is Rs.1.5 lac. to 2.0 lac.
50% said their annual saving is Rs.2.0 lac. to 2.5 lac.
WHERE DO YOU LIKE TO INVEST
0
10
20
30
40
50
60
70
80
40 - 45 age 46 - 50 age 51 - 55 age
Public Private Public and Private both
INFERENCES
• SALARIED EMPLOYEE OF AGE GROUP 40 TO 45
10% said they prefer to invest in Public
40% said they prefer to invest in Private
Page | 116
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
50% said they prefer to invest in both Public and Private
• SALARIED EMPLOYEE OF AGE GROUP 46 TO 50
20% said they prefer to invest in Public
20% said they prefer to invest in Private
60% said they prefer to invest in both Public and Private
SALARIED EMPLOYEE OF AGE GROUP 51 TO 55
10% said they prefer to invest in Public
10% said they prefer to invest in Private
80% said they prefer to invest in both Public and Private
Page | 117
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
HOW MUCH RISK YOU LIKE TO TAKE
0
10
20
30
40
50
60
70
80
40 - 45 age 46 - 50 age 51 - 55 age
High Risk Medium Risk Low Risk
INFERENCES
• SALARIED EMPLOYEE OF AGE GROUP 40 TO 45
30% said they would like to take High Risk
50% said they would like to take Medium Risk
20% said they would like to take Low Risk
SALARIED EMPLOYEE OF AGE GROUP 46 TO 50
10% said they would like to take High Risk
80% said they would like to take Medium Risk
Page | 118
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
10% said they would like to take Low Risk
SALARIED EMPLOYEE OF AGE GROUP 51 TO 55
10% said they would like to take High Risk
20% said they would like to take Medium Risk
70% said they would like to take Low Risk
ARE YOU AWARE ABOUT TAX STRUCTURE
0
10
20
30
40
50
60
70
80
90
40 - 45 age 46 - 50 age 51 - 55 age
Yes No
INFERENCES
• SALARIED EMPLOYEE OF AGE GROUP 40 TO 45
Page | 119
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
90% said Yes they are aware about Tax Structure
10% said No they are not aware by Tax Structure
• SALARIED EMPLOYEE OF AGE GROUP 46 TO 50
80% said Yes they are aware about Tax Structure
20% said No they are not aware by Tax Structure
• SALARIED EMPLOYEE OF AGE GROUP 51 TO 55
80% said Yes they are aware about Tax Structure
20% said No they are not aware by Tax Structure
Page | 120
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
WHERE YOU LIKE TO INVEST
0
10
20
30
40
50
60
40 - 45 age 46 - 50 age 51 - 55 age
Insurance PPF NSC KVP Securities Bank
INFERENCES
• SALARIED EMPLOYEE OF AGE GROUP 40 TO 45
55% said they prefer to invest in Insurance
10% said they prefer to invest in PPF
15% said they prefer to invest in NSC
5% said that they prefer to invest in KVP
17% said that they prefer to invest in Securities
8% said that they prefer to invest in Bank
• SALARIED EMPLOYEE OF AGE GROUP 46 TO 50
50% said they prefer to invest in Insurance
15% said they prefer to invest in PPF
Page | 121
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
5% said they prefer to invest in NSC
10% said that they prefer to invest in KVP
7% said that they prefer to invest in Securities
8% said that they prefer to invest in Bank
• SALARIED EMPLOYEE OF AGE GROUP 51 TO 55
55% said they prefer to invest in Insurance
10% said they prefer to invest in PPF
5% said they prefer to invest in NSC
10% said that they prefer to invest in KVP
10% said that they prefer to invest in Securities
10% said that they prefer to invest in Bank
Page | 122
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
FINDINGS
In this research salaried employees are classified in three strata
• One strata is of employee of age between 40 to 45
• Second strata is of employee of age between 46 to 50
• Third strata is of employee of age 51 to 55.
These three groups of employees respond differently. This difference is because
of different perception
Generally most people prefer to keep their money float in the market
despite keeping in bank of the low rate of return as bank provides.
From the survey we come to know about the increasing popularity of
investment among people due to the following reasons:
Increase in working population, larger family incomes and
consequent higher savings.
Increase in tendency of people to hedge against inflation.
Availability of large and attractive investment alternatives.
Ability of investments to provide income and capital gains.
Provision of tax incentives in respect of investments in
specified channels.
Page | 123
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
Most people preferred area for investment by people is insurance
sector.
People also prefer to invest in post office because of the saving in taxes
and there return and security as a government investment instrument.
In the coming future people would like to invest in Insurance along
with fixed deposit, real estate, mutual funds and primary market.
According to the survey done, most of the people invest money to get
higher returns and to gain on there savings.
Most of the public sector employees at present invest their money in
banks as they consider to be the safest financial institutions, although
they would prefer primary market and mutual funds if they invest in
future.
Generally people deposit money in bank for the purpose of immediate
withdrawal as per their need of money.
Government servants at present mostly invest in banks and post office.
However, in future they would like to make investment in insurance.
Private sector employees mostly make investments in banks but in the
future they would prefer to invest their money in fixed deposits.
People of income group 10,000-15,000 presently invest in banks and in
the future they would like to invest in fixed deposits and to pay for the
Page | 124
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
investment purpose in which they get higher return on there
investment.
People who fall under income group of 15,000-20,000 presently make
their investments in Insurance and other tax saving investments to save
there tax labiality.
According to the survey done, most of the people who fall under the
income group of 20,000-25,000 invest in different investments and in
future they would like to invest in tax savings instruments. (Bonds
NSC mutual fund etc.)
Most of the investors falling under the category of income group which
is above Rs. 25,000 presently invest in insurance while in future their
choice of investment would preferably be real estate and fixed deposits.
People who are above the age of 51-55 presently make maximum of
their investments in Insurance as well as PPF and banks.
Page | 125
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
RECOMMENDATIONS
Today’s environment is very competitive hence to survive in such environment
people need both power and wealth.
Earlier people prefer to keep their money either on home or keep in bank but
today people to see their money grow and today a lot of options are present
which are not only attractive but fast growing too.
People who can bear high risk for that person the security market are good.
There is high risk and high return according to their investment amount.
Salaried people wants the security in their savings so for those people who
wants high security Insurance and other Government instruments of
Investments is better option in which there is a fix growth up to certain amount.
Today’s market is so fluctuating for this type of market security is important as
well as growth so Insurance is good option for them in which there is return as
well as security.
Page | 126
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
LIMIT ATIONS
This study is based on reaction hence it is not an indication that everything is
true t its fullest sense.
Time is act as constraint
Some employees refuse to fill the questionnaire because they do not free time
Some employee does not read the questions carefully as a result they give the
wrong response
Most of employees do not give answer of the personal question related to PAN
number and Accurate Salary.
Page | 127
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
CONCLUSION
Many years ago people used to hold money means that they kept their money as
cash in hand or other safe places
But today people are more aware of different investment option, which are the
key of growth of money
Instead of a range of investment option salaried employees prefer to take
medium risk and they will invest their money in that option where they get
maximum tax benefit like insurance and PPF
Page | 128
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
QUESTIONNAIRE
This is a research pertaining to measuring satisfaction level of retailers. Please
give your response to the following questions by ticking the appropriate choice.
1. Respondent Name__________________________________________
2. Your Age from 40
to 45 □ from 46 to 50 □ from 51 to 55 □
3. Education ______________________________________
4. Name of Organization / Company where you are working
_______________________________________________
5. Nature of Company Public
□ Private □
6. Post / Designation ____________________________________
7. Average Monthly Salary Rs.
10,000 to 20,000 □ Rs. 21,000 to 30,000 □ Rs. 31,000 to
35,000 □
Page | 129
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
8. Your Anuual Savings
Rs. 1 to 1.5 Lac. □ Rs. 1.5 to 2.0 Lac. □ Rs. 2.0 to
2.5 Lac. □
9. Where you prefer to invest ?
Public □ Private □
10.Liabilities (dependent) _________________________________________
Tax Payee Yes □
No □
11.PAN No. __________________________________________
Are you filling up Income Tax Return? Yes □
No □
12.Are you aware about tax Structure?
Yes □ No □
13.What is your tax liability (approximate) ___________________
Where would you like to invest Insurance □
PPF □ NSC □
mutual fund □ Securities □ Bank Saving Scheme □ Post
office Saving Scheme □ Real Estate □
14. How much risk you like to take ?
Page | 130
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
High □ Medium □ Low □
THANKS FOR YOUR TIME AND COOPERATION
……………………………………………………………………………………
…………
Page | 131
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
BIBLIOGRAPHY
Books:
Kothari C.R. Research Methodology
Kotler Philip, Marketing Management
Pandey I.M. Financial Management
Bajaj Capital publication
Investor India
Web Site
www.google.com
www.Bajaj Capital .com
www.nseindia.com
www.Bajaj Capital mutualfund.com
www.amfi.com
www.mutualfundofinsa.com
Page | 132
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/
BAJAJ CAPITAL LTD. C.I.M.T
NESW PAPERS (ECONOMIC TIMES, BUSINESS WORLD, TIMES
OF INDIA)
Page | 133
www.final-yearprojects.co.cc | www.troubleshoot4free.com/fyp/