ICICIdirect.com Vikas Maheshwari 05106

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AN ORGANISATION STUDY OF ICICIdirect.com

INTERNSHIP REPORT

SUBMITTED TO BANGALORE UNIVERSITY IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS OF THE MBA DEGREE COURSE

SUBMITTED BY

VIKAS MAHESHWARI05XQCM6112

Under the Guidance and Supervision of

PROF. B.V. RUDRAMURTHY

Faculty-Finance & Control Area

2005-07



M.P. BIRLA INSTITUTE OF MANAGEMENT

Associate Bharatiya Vidya Bhavan

# 43, Race Course Road

Bangalore-560001

DECLARATION

I hereby certify that the internship entitled An Organizational Study of

ICICIdirect.com has been carried out by me under the guidance and

supervision of Prof. B.V. Rudramurthy, M. P. Birla Institute of

Management, Associate Bharatiya Vidya Bhavan, Bangalore.

The work was carried out in partial fulfillment of the requirement for the

award of M. B. A. course of Bangalore University.

The report or any part thereof has not been submitted to any University or

Institute for the award of any diploma or degree.

Bangalore

September 29, 2006Vikas Maheshwari

Reg. No. 05XQCM6112



M. P. Birla Institute of ManagementASSOCIATE BHARATIYA VIDYA BHAVAN

#43, RACE COURSE ROAD, BANGALORE -560001, INDIA

Prof. B.V. Rudramurthy

Certificate

This is to certify that this report entitled An Organizational Study of

ICICIdirect.com is a compilation of the internship study carried out by Mr.

Vikas Maheshwari (Reg. No. 05XQCM6112), a Student Executive of MP Birla

Institute of Management, Bangalore.

Mr. Vikas Maheshwari worked under my guidance and supervision.

BangaloreSeptember 29, 2006

( B.V. Rudramurthy)

Tel 080-22382798/9634, Fax 080-22389635Email: [email protected], Website: www.mpbim.com

http://www.mpbim.com/

mailto:[email protected]



M. P. Birla Institute of ManagementASSOCIATE BHARATIYA VIDYA BHAVAN

#43, RACE COURSE ROAD, BANGALORE -560001, INDIA

Dr. N. S. MalavalliPRINCIPAL

Certificate

This is to certify that this report entitled An Organizational Study of

ICICIdirect.com is the output of internship carried out by Mr. Vikas

Maheshwari, a Student Executive of MP Birla Institute of Management,Bangalore under the guidance and supervision of Prof, B. V. Rudramurthy,

MPBIM, Bangalore (Internal Guide) and Mr. Ravi Agarwal, Unit Manager, ICICI

DIRECT, Malleshwaram, Bangalore(External Guide) and Mr. Pradeep K.,Regional

product manager,ICICIdirect.com,Bangalore.

Bangalore

October 29, 2006

(N. S. Malavalli)

Tel 080-22382798/9634, Fax 080-22389636Email: [email protected], Website: www.mpbim.com

http://www.mpbim.com/

mailto:[email protected]



ACKNOWLEDGEMENT

I express my deep sense of gratitude to Prof. B.V. Rudramurthy, M. P. Birla

Institute of Management (MPBIM), Associate Bharatiya Vidya Bhavan,

Bangalore, for his most valuable guidance, inspiring supervision, periodical

monitoring and sparing his precious time in my internship.

I also express my sincere gratitude to Mr. Ravi Agarwal , Unit Manager,

ICICIdirect.com, Malleshwaram, Mr. Pradeed K., Regional Product

Manager, ICICIdirect.com, Bangalore for all the inspirations and giving me

an opportunity to carry out the organizational study of ICICIdirect.com.

Without his guidance and help, the internship would not have been possible.

I am grateful to DR. N. S. Malavalli, Principal, MPBIM for providing the

facilities.

I owe my sincere gratitude to all my friends Lalit Kankani, Vishal Agarwal,

Rishiraj Maheshwari, Kishan Somani who discussed on the internship fromtime to time, co-operated and helped me and in the work.

I am indebted to my parents, brother and sisters who encouraged me always

in my study.

Vikas Maheshwari



CONTENTS

Chapter I

INDUSTRY/COMPANY PROFILE

Chapter II

ORGANISATION STRUCTURE

Chapter III

PRODUCT PORTFOLIO

Chapter IV

HUMAR RESOURCE OF ICICI BANK

Chapter V

SWOT ANALYSIS, VISION & GOALS

Chapter VI

RECOMMENDATIONS

BIBLIOGRAPHYPart B

Analysis between Equity and Mutual Funds



Executive summary

ICICI Ltd. Is one of the India’s largest financial institution is gearing up to

transform itself in to a universal bank leveraging on the ‘click and mortar’

strategy. The company has a presence in diverse segments of the financial

market by way of its subsidiaries.

In the present scenario the service industry has given utmost

importance of doing a particular task at a faster time in order to satisfy the

customers and to attract new customers. The main reason of establishing a

depositary system is to lessen the work and fast the processing. This system

is overcoming the disadvantages of the physical trading of the securities in

the stock exchange.

ICICI Direct.com is a truly online share trading site, which means that

from the time you punch in a buy or sell trade on you computer to the final

settlement in you account, everything happens completely online. The 3-in-1

e-invest account integrates your brokerage, bank and one or more depository

accounts to make sure that you can do the otherwise cumbersome share

trading from your home or office, absolutely at any time of the day.

Objectives of The Study

Study of ICICI

Study of ICICIdirect.com

Study of the product offered by ICICIdirect.com

Study of demat service providers

Study of the organizational structure of ICICIdirect.com

SWOT analysis.

Recommendations



CHAPTER IINDUSTRY / COMPANY PROFILE



Overview

ICICI Bank is India's second-largest bank with total assets of about

Rs.2513.89 bn and a network of over 614 branches and offices and about

2200 ATMs. ICICI Bank offers a wide range of banking products and

financial services to corporate and retail customers through a variety of

delivery channels and through its specialised subsidiaries and affiliates in the

areas of investment banking, life and non-life insurance, venture capital and

asset management. ICICI Bank's equity shares are listed in India on stock

exchanges at Kolkata and Vadodara, the Stock Exchange, Mumbai and the

National Stock Exchange of India Limited and its American Depositary

Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).



ICICI Bank was originally promoted in 1994 by ICICI Limited, an

Indian financial institution, and was its wholly-owned subsidiary. ICICI's

shareholding in ICICI Bank was reduced to 46% through a public offering of

shares in India in fiscal 1998, an equity offering in the form of ADRs listed

on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura

Limited in an all-stock amalgamation in fiscal 2001, and secondary market

sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI

was formed in 1955 at the initiative of the World Bank, the Government of

India and representatives of Indian industry. The principal objective was to

create a development financial institution for providing medium-term and

long-term project financing to Indian businesses. In the 1990s, ICICI

transformed its business from a development financial institution offering

only project finance to a diversified financial services group offering a wide

variety of products and services, both directly and through a number of

subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first

Indian company and the first bank or financial institution from non-Japan

Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the

context of the emerging competitive scenario in the Indian banking industry,

and the move towards universal banking, the managements of ICICI and

ICICI Bank formed the view that the merger of ICICI with ICICI Bank

would be the optimal strategic alternative for both entities, and would create

the optimal legal structure for the ICICI group's universal banking strategy.

The merger would enhance value for ICICI shareholders through the merged

entity's access to low-cost deposits, greater opportunities for earning fee-

based income and the ability to participate in the payments system and



provide transaction-banking services. The merger would enhance value for

ICICI Bank shareholders through a large capital base and scale of

operations, seamless access to ICICI's strong corporate relationships built up

over five decades, entry into new business segments, higher market share in

various business segments, particularly fee-based services, and access to the

vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of

Directors of ICICI and ICICI Bank approved the merger of ICICI and two of

its wholly-owned retail finance subsidiaries, ICICI Personal Financial

Services Limited and ICICI Capital Services Limited, with ICICI Bank. The

merger was approved by shareholders of ICICI and ICICI Bank in January

2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by

the High Court of Judicature at Mumbai and the Reserve Bank of India in

April 2002. Consequent to the merger, the ICICI group's financing and

banking operations, both wholesale and retail, have been integrated in a

single entity.



INDUSTRIAL CREDIT AND INVESTMENT

CORPORATION OF INDIA LTD

ICICI was formed in 1955 at the initiative of the World Bank, the

Government of India and representatives of Indian industry. The principal

objective was to create a development financial institution for providing

medium-term and long-term project financing to Indian businesses.

In the 1990s, ICICI transformed its business from a development

financial institution offering only project finance to a diversified financial

services group offering a wide variety of products and services, both directly

and through a number of subsidiaries and affiliates like ICICI Bank.

In 1999, ICICI become the first Indian company and the first bank or

financial institution from non-Japan Asia to be listed on the NYSE. After



consideration of various corporate structuring alternatives in the context of

the emerging competitive scenario in the Indian banking industry, and the

move towards universal banking, the managements of ICICI and ICICI Bank

formed the view that the merger of ICICI with ICICI Bank would be the

optimal strategic alternative for both entities, and would create the optimal

legal structure for the ICICI group's universal banking strategy. The merger

would enhance value for ICICI shareholders through the merged entity's

access to low-cost deposits, greater opportunities for earning fee-based

income and the ability to participate in the payments system and provide

transaction-banking services. The merger would enhance value for ICICI

Bank shareholders through a large capital base and scale of operations,

seamless access to ICICI's strong corporate relationships built up over five

decades, entry into new business segments, higher market share in various

business segments, particularly fee-based services, and access to the vast

talent pool of ICICI and its subsidiaries. With the growth of industries, the

financial services sector has assumed great momentum with unprecedented

investment and employment potential. ICICI is no exception to this global

phenomenon. Beginning with a modest commercial banking, the bank has

embarked upon a wide range of banking, financial and insurance services.



Being the first development bank registered under the Companies Act,

1956, the range of services offered by the bank has expanded considerably.

The following services assume a significant portion of the bank ’s activities;

Commercial Banking

Development Banking

Trading in Securities

Merchant Banking

Insurance

Mutual Funds

Foreign Exchange Dealings

The bank has made significant inroads into the retail banking sector,

thereby, indicating growth in business and exploitation of consumer

potential integrated with the overall policy objective of mobilization of

savings into investments.



THE MOST COMPREHENSIVE ONLINE SHARE TRADING SITE



INDUSTRY PROFILE

The Indian middle class is large and growing; wages are low; many

workers are well educated and speak English; investors are optimistic and

local stocks are up. Despite political turmoil, the country presses on with

economic reforms. The only cause of worry that India could face is

Infrastructural hassles.

The rapid economic growth of the last few years has put heavy stress

on India's infrastructural facilities. The projections of further expansion in

key areas could snap the already strained lines of transportation unless

massive programs of expansion and modernization are put in place.Problems include power demand shortfall, port traffic capacity mismatch,

poor road conditions (only half of the country's roads are surfaced), low

telephone penetration (1.4% of population).

Diverse Market

The Indian market is widely diverse. The country has 17 official

languages, 6 major religions, and ethnic diversity as wide as all of Europe.

Thus, tastes and preferences differ greatly among sections of consumers.

Therefore, it is advisable to develop a good understanding of the Indian

market and overall economy before taking the plunge. Research firms in

India can provide the information to determine how, when and where to

enter the market. There are also companies which can guide the foreign firm

through the entry process from beginning to end --performing the requisite

research, assisting with configuration of the project, helping develop Indian

partners and financing, finding the land or ready premises, and pushing

through the paperwork required.



Indian Stock Market Overview:

The Bombay Stock Exchange (BSE) and the National Stock Exchange

of India Ltd (NSE) are the two primary exchanges in India. In addition, there

are 22 Regional Stock Exchanges. However, the BSE and NSE have

established themselves as the two leading exchanges and account for about

80 per cent of the equity volume traded in India. The NSE and BSE are

equal in size in terms of daily traded volume. Most key stocks are traded on

both the exchanges and hence the investor could buy them on either

exchange.

The primary index of BSE is BSE Sensex comprising 30 stocks. NSE

has the S&P NSE 50 Index (Nifty) which consists of fifty stocks. The BSE

Sensex is the older and more widely followed index. Both these indices are

calculated on the basis of market capitalization and contain the heavily

traded shares from key sectors. The markets are closed on Saturdays and

Sundays.

Both the exchanges have switched over from the open outcry trading

system to a fully automated computerized mode of trading known as BOLT

(BSE Online Trading) and NEAT (National Exchange Automated Trading)

System. It facilitates more efficient processing, automatic order matching,

faster execution of trades and transparency. The key regulator governing

Stock Exchanges, Brokers, Depositories, Depository participants, Mutual

Funds, FIIs and other participants in Indian secondary and primary market is

the Securities and Exchange Board of India (SEBI) Ltd.



Working of a stock market:

A person desirous of buying/selling shares in the market has to first

place his order with a broker. When the buy order of the shares is

communicated to the broker he routes the order through his system to the

exchange. The order stays in the queue exchange's systems and gets

executed when the order logs on to the system within buy limit that has been

specified. The shares purchased will be sent to the purchaser by the brokereither in physical or demat format.

Emergence of ICICIdirect.com:

Due to the existing financial market scenario and the ever increasing

use of computers and its tools most predominantly the internet, ICICI in

2000 appointed Mckinsey to study the market potential for an online portal

dealing in trading with securities. Mckinsey in its report stated the market

potential to consist at around Twenty Five thousand people only. But

regardless of this fact, ICICI DIRECT.COM was started and now it has

grown to more than Four lakh Fifty thousand customers.



CHAPTER IIORGANIZATION STRUCTURE



ORGANIZATION STRUCTURE

ICICI Bank believes that the structure of an organization needs to be

dynamic, constantly evolving and responsive to changes both in the external

and internal environments. The organizational structure is designed to

support our business goals, and is flexible while at the same time ensuring

effective control and supervision and consistency in standards across

business groups. The organizational structure is divided into five principal

groups – Retail Banking, Wholesale Banking, Project Finance, Special

Assets Management, International Business and Corporate Centre.

The Retail Banking Group comprises ICICI Bank's retail assets

business including various retail credit products, retail liabilities (including

our own deposit accounts as well as distribution of third part liability

products) and rural micro-banking.

The Wholesale Banking Group comprises ICICI Bank's corporate

banking business including credit products and banking services, with

separate dedicated groups for large corporates. Government and publicsector entities and emerging corporates. Treasury, structured finance and

credit portfolio management also form part of this group.

The Project Finance Group comprises our project finance operations

for infrastructure, oil and gas, manufacturing and shipping sectors. The

Special Assets Management Group is responsible for large non-performing

loans and accounts under watch.

The International Business Group is responsible for ICICI Bank's

international operations as well as coordinating the international strategies

and alliances of its subsidiaries and affiliates.



The Corporate Centre comprises all shared services and corporate

functions, including finance and secretarial, investor relations, risk

management, legal, human resources and corporate branding and

communications.

Organizational Structure of Karnataka Region:

The organization structure at ICICIdirect.com is lateral in nature. It is

headquartered at Mumbai from where the top most hierarchy operates. As

ICICI is spread all over India the second level hierarchy consists of a

regional product manager.



ORGANISATIONAL CHART

ICICI direct .com

PRODUCT

DEVELOPMENTRETAIL

HUGE NETWORTH

INDIVIDUAL DESK

DIRECT BUSINESS

CATALYST

OPERATIONS SALES

E - INVEST WISE INVEST

CORPORATE

RETAIL

EXIBITIONS /

STALLSREGIONAL

PRODUCT

MANAGER

HIGH NETWORTH

INDIVIDUAL

CROSS

SELLING

SEGMENTMANAGER

SEGMENT

MANAGER

SEGMENTMANAGER

SEGMENT

MANAGER

PRODUCT

CO-ORDINATOR

UNIT MANAGERS

TRANIEES/AGENTS

Refer to the next page

ICICI direct .com

PRODUCT

DEVELOPMENTRETAIL

HUGE NETWORTH

INDIVIDUAL DESK

DIRECT BUSINESS

CATALYST

OPERATIONS SALES

E - INVEST WISE INVEST

CORPORATE

RETAIL

EXIBITIONS /

STALLSREGIONAL

PRODUCT

MANAGER

HIGH NETWORTH

INDIVIDUAL

CROSS

SELLING

SEGMENTMANAGER

SEGMENT

MANAGER

SEGMENTMANAGER

SEGMENT

MANAGER

PRODUCT

CO-ORDINATOR

UNIT MANAGERS

TRANIEES/AGENTS

Refer to the next page



WISE INVEST

PRODUCT

CO-ORDINATOR

REGIONAL PRODUCT

MANAGER

SEGMENTMANAGER

UNIT

MANAGER

TRAINEES/

AGENTS

WISE INVEST

PRODUCT

CO-ORDINATOR

REGIONAL PRODUCT

MANAGER

SEGMENTMANAGER

UNIT

MANAGER

TRAINEES/

AGENTS

Sales consists of two products E-Invest and Wise Invest. For both

these products there are product co-ordinators.

Sales of both these products are regionally looked after by Mr.

Madhusudhan, Regional Product manager for South India.

These products are divided into four categories:-Corporate Retail

Exhibitions/ stalls

HNI handled by

Cross Selling



Under these category heads, a team of segment managers’ work

at regional level to achieve the purposes set out by them. They

also have to report to the Regional Product manager.

The bank usually has many branches to look after which Unit

managers along with trainees/agents are appointed who report to the

Segment managers and the Regional product manager.



CHAPTER IIIPRODUCT PORTFOLIO



THE PRODUCTS

1. E-Invest Account--Online Share Trading A/c

2. WISE Invest Account--Online Investment A/c



Products available on E-Invest

E-Invest

Equity Derivatives MutualFunds

IPOs Bonds

Cash

Margin

BTST

Spot

Futures

Options

Purchases

Redemption

SIP & SWP

Switch In / Out

Transfer In

GOI Bonda ICICI Bonds



DEMAT

ICICI Bank Demat Services boasts of an ever-growing customer base of

over 5 Lakh Account Holders. In its continuous endeavor to offer best of the

class services to its customers it offers the following features:

Online access to the customers demat account. Checks holdings, and

status of requests and much more.

Dedicated specially trained customer care executives at its call centre,

to handle all queries.

Holding and Transaction details available round the clock on IVR

(Interactive Voice Response) system.With a countrywide network of over 614 branches, one is never far

from an ICICI Bank Demat Services outlet.

Customers can also avail online share trading services from

ICICIdirect.com and get a 3 in 1 account inclusive of a demat, ICICI

bank account and a online trading account.



EQUITY:

Trading shares - ICICIdirect.com way

Integrated 3-in-1 account removes all hassles after placing order.

Monies/Shares get debited/ credited automatically on payin/payout days.

Go to website- available anytime

Place orders- even after market hours

Get order status anytime- even modify/cancel orders anytime if

order lies unexecuted.

No writing cheques/TIFDs. No chasing broker.

Get contract notes online.

Trading shares - The past

Calling broker

Waiting for pick-up

Placing orders

Placing wrong orders

Waiting for order confirmation

Waiting for contract notes

Writing cheques/ TIFDs for pay-in

Chasing broker for monies/ shares after payout



Products and Services

A product for every need, ICICIdirect.com is the most comprehensive

website, which allows you to invest in shares, mutual funds and other

financial products. Simply put we offer you’re a product for every

investment need of yours.

1. Trading in shares:

ICICIdirect.com offers you various options while trading in Shares.

Cash Trading This is a delivery based trading system, which is

generally done with the intention of taking delivery of

shares or monies. A cash position is meant to be settled

by delivery, the required cash or securities are blocked

in full.

Margin Trading You can also do an intra-settlement trading upto 4 times

your available funds, wherein you take long buy/short

sell positions within the same settlement cycle.

More about 3-in-1 account

This account integrates your bank, demat and broking accounts. If

you purchase/sell shares, the funds are automatically debited/

credited from/to your bank account and shares are automatically

credited/debited to/from your demat account respectively on the

settlement date.

This therefore completely eliminates the hassles of writing

cheques/TIFDs or chasing brokers etc.

And brings CONVENIENCE to your share trading.



Spot Trading When you are looking at an immediate liquidly option,

‘Cash on Spot’ may work the best for you, On selling

shares through “cash on spot”, money is credited to your

bank a/c the same evening and not on the exchange

payout date. This money can then be withdrawn from

any of ICICI Bank ATM’s

BTST Buy Today Sell Tomorrow (BTST) is a facility that

allows you to sell shares even one day after the buy

order date, without you having to wait for the receipt of

shares into your demat account.

CallNTrade CallNTradeR allows you to call on a local number in

your city and trade on the telephone through our

Customer Service Executive. This facility is currently

available in over 11 major states across India.

Trading on NSE/

BSE

Through ICICI direct. com, you can trade on NSE as

well as BSE

Market Order You could trade by placing market orders during

market hours that allows your to trade at the best

obtainable price in the market at the time of execution of

the order

Limit Order Allows you to place a buy/sell order at a price defined

by you, the execution can happen at a price more

favourable than the price, which is defined by you, limit

orders can be placed you during holidays and non

market hours too.



What’s so unique about ICICIdirect.com?

Convenience:

A unique 3-in-1 account integrates your banking, broking and

demat accounts..

Speed:

You can now get the latest quotes of scrip’s on ICICIdirect.com

and place an order almost instantly.

Control:

You can be assured that you have in fact placed an order at the

price you always wanted to, but may not have been able to do so till

now. Thereby giving you control over your own trades.

Independence:

Instead of transferring monies to a broker's pool or towards

deposits, you can manage your own demat and bank accounts when

you trade through ICICIdirect.com.

Trust:

ICICIdirect.com comes to you from ICICI, the organisation

trusted by millions of Indians.



Value added services

Regular communicating

Ideal MF portfolios,

Ideal asset allocation,

Start and end dates for IPO’s and bonds,

Invitation to sessions on Investments / Mutual funds etc.

Host of content features

Keep yourself updated

Weekly & monthly stock movers

News from CNBC and ReutersScreen stocks

View P&L, financial ratio, background and balance sheet of over

5000 companies with our corporate info bank.

My research - a step-by-step guide to help you research a stock.

Latest NAV for mutual funds

Portfolio tracker to monitor the gains and losses on your

investments.

ICICIdirect University to guide you through concepts and on

how to trade



WHY PEOPLE PREFER ICICI BANK FOR ONLINE

SHARE TRADING:

ICICI DIRECT E-INVEST ACCOUNT

BECOMING A CUSTOMER

EXISTING BANK CUSTOMERS

BANK ACCOUNT / DEMAT ACCOUNT

NEW ICICI E-INVEST CUSTOMERS

ONLINE INVESTING

SETTLEMENT OF TRADE

MARGIN PRODUCT

CASH ON SPOT

BUY TODAY SELL TOMMAROW (BTST)

TRADING IN DERIVATIVES (FUTURES&OPTIONS)

DIGITALLY SIGNED CONTRACT NOTE

CORPORATE BENEFITS

NON PARI PASSU (NPP) SHARESMUTUAL FUNDS FAQ

RESEARCH AND OTHER RESOURCES

PASSWORD

SECURITY

ACCESSING BANK ACCOUNTAND SETTING LIMITS

ACCESS TO WEB SITE

RETAIL DEBT



C2T AND ITS BENEFITS

C2T: CONVERSION TO TRADING – A GLIMPSE

A new version of after sales service that has a dual benefit to both

bank and the customers. C2T is an approach in ICICI Bank, through which

the already existing customers who are not trading or who have not at all

activated or logged in their I-Direct A/c over a period, say 3 to 6 months are

tried to be converted into regular traders through this process or approach.

In this process, the feedback of the existing customers- those who

have not been traded yet or who have not been trading for a considerable

period of time is found out or unearthed form the Database of the customers,

with the help of computers and other tracking systems. Thus a list of such

customers is generated periodically and is distributed to some of the bank

branches in various regions to convert them into traders.

BENEFITS OF C2T:

Enables both customers and Bank to benefit form the process.

All the problems & doubts of the customer can be solved and help

him in using the product fully.

Good Customer Relationship is established.

Helps bank in getting more brokerage charges in future.

Improves the loyalty of the customer for the bank.



INVESTMENTS

ICICI Bank Bonds

• GOI Bonds

• Mutual Funds

• IPO

GOI Savings Bonds

6.5% Savings Bonds (Non Taxable), 2003

• Low risk.

• Interest Income is Tax Free.

• Nomination facility available

• Cannot be traded.

• No loan facility available (as per rule of GOI).

8% Savings Bonds (Taxable), 2003

• Low risk.

• Reasonable investment tenure.

• Nomination facility available.

• Cannot be traded in secondary market.

• Interest income taxable.

• No loan facility available (as per rule of GOI).



MUTUAL FUNDS INVESTMENTS THROUGH ICICI BANK

About Mutual Funds

Mutual Funds pool money of various investors to purchase a wide

variety of securities while pursuing a specific goal. Selection of Securities

for the purpose is done by specialists from the field. Returns generated are

distributed to the Investors.

Mutual Fund Companies offer various schemes. Investors can choose any

particular Fund/Scheme or mix of Funds/Schemes depending upon their

perception towards risk. Investment is done on the basis of prevailing Net

Asset Values of various schemes.

Mutual Funds Investments are subject to Market Risks.

Types of Funds Sold:

ICICI Bank helps customers to determine which types of funds they

need to meet their investment goals. This may include the following types of

funds:

• Debt : Liquid schemes, Income schemes, G-sec schemes,

Monthly Income Schemes etc.

• Equity : Diversified Equity Schemes, Sector Schemes, Index

Schemes etc.

• Hybrid Funds: Balanced Schemes, Special Schemes - Pension

Schemes, Child education Schemes etc.



ICICI Bank helps customers to identify an appropriate mix of Mutual

Fund schemes for their portfolio using asset allocation strategies.

Through ICICI Bank one can invest in various schemes of multiple

mutual funds with decent performance record. Customers can take the aid of

ICICI Bank's various research reports on mutual funds and their schemes

before choosing a scheme for investment.

ICICI Bank offers investment in Mutual Funds through Multiple Channels:

With ICICI Bank, you can invest in Mutual Funds through the

following channels:

• ICICI Bank Branches

• ICICI Bank ATMs

• ICICI Direct.Com

IPO

Invest in IPO's Online:

One can invest in IPO’s online through www.ICICIdirect.com with

same convenience of investing in equities - hassle-free and with zero paper

work. Also, get in-depth analyses of new IPO’s issues (Initial Public

Offerings) which are about to hit the market. IPO calendar, recent IPO

listings, prospectus/offer documents and live prices will help customers to

keep on top of the IPO markets.

http://www.icicidirect.com/



WISE Invest

Bonds IPO’s Mutual funds Insurance Bank Deposits

GOI Bonds

Tax Saving Bonds

Purchase

Redemption

SIP & SWP

Switch In / Out

Transfer In

New Policies

Premium Payments

FD

RD

Products available on Wise Invest



Products Offered under WISE Invest

MFs,Tax saving bonds,

GOI bonds,

IPOs,

Insurance

FDs / RDs….all at the click of a button.

With ICICIdirect’s WISE Invest Account, one can invest in

Mutual funds, Tax saving bonds, GOI bonds, Insurance, IPOs

conveniently at the click of a mouse

You can now do away the hassles of filling up long forms,

writing cheques, waiting in long queues, following up with

various brokers / agents etc

All this and more at an account opening fee of just Rs. 350.

Upgradation of the account to a share trading account can be

done anytime in future

WISE Invest Account



Value added services

We will be regularly communicating

Ideal MF portfolios.

Ideal asset allocation.

Start and end dates for IPO’s and bonds.

Invitation to sessions on Investments / Mutual funds etc.

Usual way of investing will entail

Continuous follow-up with broker.

Filling up long forms for MFs and IPO’s.

Contacting an insurance agent and writing cheques for insurance.

Visiting the bank and standing in queues for FDs & tax saving

bonds. etc

This account will do away all these hassles. You can make all your

investments online conveniently and track all past investments atany time of the day.

Why WISE Invest



CHAPTER IVHUMAN RESOURCE OF ICICI BANK

HUMAN RESOURCE OF ICICI BANK:



The Human Resources Department of the Bank is one of the most

proactive HR departments in the Indian Banking industry, having won

several industry awards for implementing proactive HR practices in the

Banking industry. The HR department provides the ideal foil to the

relentless business drive of the Retail and Wholesale Banking Groups and

prides itself on its role as a human relations change agent in the Bank. Areas

of HR interest include Employee Relations, Performance Management

Systems, Recruitment and Placement, Career Development and Training &

Development. A dedicated team of professional HR practitioners proactively

anticipates environmental changes and plans appropriate organizational

interventions with a view to enhance employee satisfaction. Positions for

Post Graduates in HR/Personnel Management from premier institutes exist

in the Recruitment, Training and Performance Management departments.

WORK CULTURE AT ICICI BANK

It is a tech-savvy, non-hierarchical, work environment where early

responsibility and independent decision-making enable each employee to

reach his/her potential. Coupled with this is a strong performance

management system that has built a meritocracy where high performing-high

potential individuals are duly rewarded.



SELECTION PROCESS

In the continuous endeavor to improve the selection process for recruitment

at all levels in ICICI Bank, it has carried out an in-depth study of the

competencies required to succeed in ICICI Bank. As per our research, the

competencies which indicated success at the entry level in ICICI Bank are:

Drive for results

Process Orientation

Interpersonal Effectiveness

Analytical Thinking

Innovation

Team Effectiveness

In order to assess the same ICICI Bank uses a set of 3 tools: -

1. A Mental Ability Tests (for candidates with 0-2 years of work

experience)

2. A Personality profiling system

3. A Personal Interview

The Mental Ability Test gives ICICI Bank a fair and objective

assessment of candidates’ skills in the areas of verbal reasoning, numerical

reasoning & diagrammatic reasoning. These are important skills for the role

of an entry level manager and people who do well in these tests tend to do

well in their jobs at ICICI Bank. The total time taken in this exercise is 2

hours with each of the three sections lasting 40 minutes. Candidates (at all

levels regardless of the number of years of work experience) are also

required to complete the Occupational Personality Questionnaire (OPQ)

before they appear for the interview, the results of which are integrated into

ICICI Bank's interview process.



CHAPTER VSWOT ANALYSIS, VISION ANDGOALS



The ICICI Bank Vision...

To be the preferred brand for total financial & banking solutions for

corporates, government sector & individuals

VISION OF ICICI BANK

Directing strengths-

Channeling thoughts

Creating value

Zeroing in on a goal

Concentrating efforts for effect

Activating ideas into enterprise

Delivery beyond expectations

GOALS OF ICICI BANK

Mobilising and structuring resources

Capitalizing on opportunities

Focusing on core competence

Creating group dynamics

Enhancing customer centricity

Value engineering

Delivering beyond expectations



SWOT ANALYSIS

STRENGTH:

1) BACKED BY A STRONG COMPANY:

ICICI Bank is India's First Universal Bank, which offers the widest range of

financial products and services. It is also India’s largest private sector bank

and has a nationwide network of 614 branches.

2) PRODUCT AIMED AT CONVENIENCE:

ICICIdirect.com is the first company to offer 3 in 1 account.

ICICIdirect.com is unique innovative and distinguished product that reduces

the hassles and offers wide convenience to the customers.

3) EVER INCREASING USAGE:

ICICIdirect.com has a growing customer base of more than 6 million and is

rapidly adding more due to increased use of internet and more and more

investors entering the stock market.

4) AUTOMATIC TRADING :

ICICIdirect.com has a feature where in at a previously determined price fed

to the computer results in buy/sell of the desired security automatically

without any manual presence.



WEAKNESS:

1) HIGH BROKERAGE RATES

The brokerage charged by the company, especially on the delivery

transactions is very high in comparison to the competitors. Company is

charging .75% brokerage on delivery calls which is very high in comparison

with other stock broking firm.

2) CUSTOMER SERVICE

The customer service department is not efficient to handle the grievances of

the retail customers. Also there is no such relationship manager for retail

customer to handle the problems faced by them.

3) ACCOUNT OPENING TIME

The time taken for opening the account is too much in comparison with

other companies. Customer often complain of delays in receiving accounts

details or login and passwords.



OPPORTUNITIES:

1) EVER INCREASING USERS OF INTERNET:

As per research India is adding millions of internet users every year. This

provides a huge opportunity to ICICIdirect.com to tap such users.

2) INCREASE IN THE NUMBER OF INVESTORS ENTERING THE

STOCK MARKET:

Recently due to the surge in IPO’s and increased income of people in India

has led to more and more people taking interest in stock market which is a

huge opportunity for ICICIdirect.com.

3) TAX SAVINGS ONLINE:

ICICIdirect.com offers many products like Tax saving Bonds and Mutual

funds. People today are keen on saving tax and for the same they can invest

in these products online. Thus this brings in a huge potential market for

ICICIdirect.com.

4) PROVIDING TRUE SERVICE:

ICICIdirect.com reduces paper work, reduces hassles like tracking the

brokers and following the investment along with this it assures safety and

security. Thus ICICIdirect.com is potentially one of the most revolutionary

product which will find increased usage in this modern world.



THREATS:

1) FEAR OF SAFETY:

People in India are very avert to giving out their credit card numbers or

buying and selling shares. This mentality possesses a significant trend

because ICICIdirect.com in its essence is a portal for online trading in

securities.

2) EMERGENCE OF OTHER PLAYERS:

New players like Reliance are about to enter the market which is a big threat

for the company. Reliance being substantially good company can definitely

give tough competition to ICICIdirect.com

3) FLUCTUATIONS IN THE SECURITY MARKET:

Stock market scams, increase in oil prices, terrorist attacks etc cause huge

fluctuations in securities market which dissuades investors who opt for

liquidity or gold.

4) THREAT FROM LOCAL BROKERS :

Local brokers charged less brokerage as compare to ICICIdirect.com which

can lead to a shift in loyalty favouring the local brokers.



CHAPTER VI

RECOMMENDATIONS



RECOMMENDATIONS

1) EDUCATING THE CUSTOMERS:-

Educating the customers that as interest rate on fixed deposits or mutual

funds or postal deposits are coming down, there is no difference between

investing in share market and in banks.

2) REDUCTION IN BROKERAGE AND ACCOUNT OPENING

CHARGES:

ICICIdirect.com charges its customers higher brokerage charges than the

local brokers which sometime amounts to double the local brokeragecharges. Therefore reduction in brokerage charges has to be seriously looked

into by ICICIdirect.com.

3) BE IN TOUCH WITH THE CUSTOMERS :

Addressing the customer’s queries and receiving constant feedback is a must

because ICICIdirect.com is an online portal and there is very less exchange

of communication between the customers and the principal.

4) PROCESSING TIME:

It was noted that during the recent IPO’s other players like Karvy opened

demat accounts in one day where as the minimum required time for

ICICIdirect.com was four days. This led to the loss of many customers.



BIBLIOGRAPHY

WEBSITES:

www.ICICIdirect.com

www.ICICIbank.com

www.google.com

MAGAZINES AND BOOKS REFERRED:

India Today

Business World

Marketing Management by Philip Kotler

http://www.google.com/

http://www.icicibank.com/

http://www.icicidirect.com/



PART B OF THE INTERNSHIP REPORT

ANALYSIS BETWEEN

EQUITY AND MUTUAL FUNDS



RESEARCH EXTRACT

In the current economic scenario interest rates are falling and fluctuation in

the share market has put investors in confusion. One finds it difficult to take

decision on investment. This is primarily, because of investments are risky

in nature and investors have to consider various factors before investing in

investment avenues.

These factors include risk, return, volatility of shares and liquidity.

The main objective of comparing investment in equity shares with mutual

fund schemes is to analyze the performance of mutual funds with their

benchmark and comparing them with equities by using risk, return, beta and

alpha as a parameter.

Historical data were taken for calculating risk, return, alpha and beta.

Analysis has done on percentage method for comparing equity shares with

mutual fund schemes. Compare to equities mutual funds are less risky with

stable returns and mutual funds gives the investor a diversified portfolio.

Those who have well knowledge in equity market they can go for equity

investments rather that investing in mutual funds because no control on the

expenses made by the fund manager.

The study will guide the new investor who wants to invest in equity

and mutual fund schemes by providing knowledge about how to measure the

risk

and return of particular scrip or mutual fund scheme. The study recommends

new investors to go for mutual funds rather than equities, because of high

risk and market instability.



Introduction to Equity Capital and Mutual Fund

Issue of shares is the most important method of raising capital. Finance

raised by the issue of shares serves as a financial floor to the company’s

capital structure. Shares indicate the ownership or equity interest in the

assets of the company. Shares are of different nominal or face values and of

different kinds to attract different kinds of investors. The maximum amount

of capital to be raised by the issue of shares is mentioned in the

memorandum of association.

During 1990-91 and 1991-92, equity accounts for 35 to 39 percent of the

total capital raised respectively. This proportion was reversed in 1992-93,

the first year of free pricing, when the share of equity increased to 62 percent.

He share of equity finance increased to a high of 73.18 percent in 1994-95.

However, in 1995-96 there is a rise in the importance of debt largely due to

the high interest rates in the economy and negative returns from the

secondary market.



Mutual Funds In India (1964 - 2000)

The end of millennium marks 36 years of existence of mutual funds in this

country. The ride through these 36 years is not been smooth. Investor

opinion is still divided. While some are for mutual funds others are against it.

UTI commenced its operations from July 1964 .The impetus for establishing

a formal institution came from the desire to increase the propensity of the

middle and lower groups to save and to invest. UTI came into existence

during a period marked by great political and economic uncertainty in India.

With war on the borders and economic turmoil that depressed the financialmarket, entrepreneurs were hesitant to enter capital market.

The already existing companies found it difficult to raise fresh capital, as

investors did not respond adequately to new issues. Earnest efforts were

required to canalize savings of the community into productive uses in order

to speed up the process of industrial growth.

The then Finance Minister, T.T. Krishnamachari set up the idea of a unit

trust that would be "open to any person or institution to purchase the units

offered by the trust. However, this institution as we see it, is intended to

cater to the needs of individual investors, and even among them as far as

possible, to those whose means are small."

His ideas took the form of the Unit Trust of India, an intermediary that

would help fulfill the twin objectives of mobilizing retail savings andinvesting those savings in the capital market and passing on the benefits so

accrued to the small investors.



UTI commenced its operations from July 1964 " with a view to encouraging

savings and investment and participation in the income, profits and gains

accruing to the Corporation from the acquisition, holding, management and

disposal of securities." Different provisions of the UTI Act laid down the

structure of management, scope of business, powers and functions of the

Trust as well as accounting, disclosures and regulatory requirements for the

Trust.

One thing is certain – the fund industry is here to stay. The industry was

one-entity show till 1986 when the UTI monopoly was broken when SBI

and Canbank mutual fund entered the arena. This was followed by the entry

of others like BOI, LIC, GIC, etc. sponsored by public sector banks. Starting

with an asset base of Rs. 25 crore in 1964 the industry has grown at a

compounded average growth rate of 27% to its current size of Rs.90000

crore.

The period 1986-1993 can be termed as the period of public sector mutual

funds (PMFs). From one player in 1985 the number increased to 8 in 1993.

The party did not last long. When the private sector made its debut in 1993-

94, the stock market was booming.

The opening up of the asset management business to private sector in 1993

saw international players like Morgan Stanley, Jardine Fleming, JP Morgan,

George Soros and Capital International along with the host of domesticplayers join the party. But for the equity funds, the period of 1994-96 was

one of the worst in the history of Indian Mutual Funds.

1999 — YEAR OF THE FUNDS



Mutual funds have been around for a long period of time to be precise for 36

yrs but the year 1999 saw immense future potential and developments in this

sector. This year signaled the year of resurgence of mutual funds and the

regaining of investor confidence in these MF’s. This time around all the

participants are involved in the revival of the funds ----- the AMC’s, the unit

holders, the other related parties. However the sole factor that gave lifer to

the revival of the funds was the Union Budget. The budget brought about a

large number of changes in one stroke. An insight of the Union Budget on

mutual funds taxation benefits is provided later.

It provided centre stage to the mutual funds, made them more attractive and

provides acceptability among the investors. The Union Budget exempted

mutual fund dividend given out by equity-oriented schemes from tax, both at

the hands of the investor as well as the mutual fund. No longer were the

mutual funds interested in selling the concept of mutual funds they wanted

to talk business which would mean to increase asset base, and to get asset

base and investor base they had to be fully armed with a whole lot of schemes for every investor .So new schemes for new IPO’s were inevitable.

The quest to attract investors extended beyond just new schemes. The funds

started to regulate themselves and were all out on winning the trust and

confidence of the investors under the aegis of the Association of Mutual

Funds of India (AMFI)

One cam say that the industry is moving from infancy to adolescence, the

industry is maturing and the investors and funds are frankly and openly

discussing difficulties opportunities and compulsions.



Concept of Equity Capital and Mutual Fund

The term Equity literally means the stock or ownership of a company. They

are also known as ordinary shares. The rate of dividend on equity shares

varies according to the amount of profit available and the intention of board

of directors. In the event of winding up of the company, equity shares can be

refunded only after all other claims, including those of preference shares for

the refund of their capital, have been met.

Equity capital or financing is money raised by a business in exchange for a

share of ownership in the company. Ownership is represented by owning

shares of stock outright or having the right to convert other financial

instruments into stock of that private company. Two key sources of equity

capital for new and emerging businesses are angel investors and venture

capital firms.

Equity capital is represented by funds that are raised by a business, in

exchange for a share of ownership in the company. Equity financing allows

a business to obtain funds without incurring debt, or without having to repay

a specific amount of money at a particular time.

The Equity Capital Markets Group (ECM) oversees the Firm's activities in

the primary equity and equity-linked markets, as well as monetization

derivatives. It provides support in the origination of primary market

transactions and manages their structuring, syndication, marketing and

distribution.



The world over, it’s been shown that over long tenures, equities – with their

risk premia – have provided approximately 7 percentage points higher returns

than risk-free options. People have to accumulate significant amounts of

wealth during their working years. Right now, a 17-year bond gives you

only 5.5 per cent. So, it is imperative that these people have some exposure

to equity.

A mutual fund is a trust that pools the money of many investors -- its

shareholders -- to invest in a variety of different securities. Investments may

be in stocks, bonds, money market securities or some combination of these.

Those securities are professionally managed on behalf of the shareholders,and each investor holds a pro rata share of the portfolio -- entitled to any

profits when the securities are sold, but subject to any losses in value as well.

A mutual fund is a group of investors operating through a fund manager to

purchase a diverse portfolio of stocks or bonds. There are myriad kinds of

mutual funds, each with its own goals and methodologies. Whether or not a

mutual fund is a good investment is a matter of much public debate, withmany claiming they are excellent for the average person, and others saying

they are simply a poor way to invest.

For the individual investor, mutual funds provide the benefit of having

someone else manage your investments, take care of recordkeeping for your

account, and diversify your rupees over many different securities that may

not be available or affordable to you otherwise. Today, minimum investment

requirements on many funds are low enough that even the smallest investor

can get started in mutual funds.



A mutual fund, by its very nature, is diversified -- its assets are invested in

many different securities. Beyond that, there are many different types of

mutual funds with different objectives and levels of growth potential,

furthering your chances to diversify.

Many critics of mutual funds point out that scarcely over 20% of mutual

funds outperform the Standard and Poor's 500 Index. This means that nearly

80% of the time, an investor would have been more profitable by simply

buying equal shares in all 500 of the companies currently on the S&P 500.



Schemes of Mutual funds

Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or close-

ended scheme depending on its maturity period.

Open-ended Scheme:

An open-ended fund or scheme is one that is available for subscription and

repurchase on a continuous basis. These schemes do not have a fixed

maturity period. Investors can conveniently buy and sell units at Net Asset

Value (NAV) related prices which are declared on a daily basis. The key

feature of open-end schemes is liquidity.

Close-ended Scheme:

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years.

The fund is open for subscription only during a specified period at the time

of launch of the scheme. Investors can invest in the scheme at the time of the

initial public issue and thereafter they can buy or sell the units of the scheme

on the stock exchanges where the units are listed. In order to provide an exit

route to the investors, some close-ended funds give an option of selling back

the units to the mutual fund through periodic repurchase at NAV related

prices. SEBI Regulations stipulate that at least one of the two exit routes is

provided to the investor i.e. either repurchase facility or through listing on

stock exchanges. These mutual funds schemes disclose NAV generally on

weekly basis.



Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or

balanced scheme considering its investment objective. Such schemes may be

open-ended or close-ended schemes as described earlier. Such schemes may

be classified mainly as follows:

Growth / Equity Oriented Scheme:

The aim of growth funds is to provide capital appreciation over the medium

to long- term. Such schemes normally invest a major part of their corpus in

equities. Such funds have comparatively high risks. These schemes provide

different options to the investors like dividend option, capital appreciation,

etc. and the investors may choose an option depending on their preferences.

Income / Debt Oriented Scheme:

The aim of income funds is to provide regular and steady income to

investors. Such schemes generally invest in fixed income securities such as

bonds, corporate debentures, Government securities and money market

instruments. Such funds are less risky compared to equity schemes. These

funds are not affected because of fluctuations in equity markets.

Balanced Scheme :

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. These are appropriate for

investors looking for moderate growth. They generally invest 40-60% in



equity and debt instruments. These funds are also affected because of

fluctuations in share prices in the stock markets. However, NAVs of such

funds are likely to be less volatile compared to pure equity funds.

Money Market or Liquid Fund:

These funds are also income funds and their aim is to provide easy liquidity,

preservation of capital and moderate income. These schemes invest

exclusively in safer short-term instruments such as treasury bills, certificates

of deposit, commercial paper and inter-bank call money, government

securities, etc. Returns on these schemes fluctuate much less compared to

other funds. These funds are appropriate for corporate and individual

investors as a means to park their surplus funds for short periods.

Gilt Fund:

These funds invest exclusively in government securities. Government

securities have no default risk. NAVs of these schemes also fluctuate due to

change in interest rates and other economic factors as is the case with

income or debt oriented schemes.

Index Funds:

Index Funds replicate the portfolio of a particular index such as the BSE

Sensitive index, S&P NSE 50 index (Nifty), etc, these schemes invest in the

securities in the same weightage comprising of an index. NAV’s of such

schemes would rise or fall in accordance with the rise or fall in the index,

though not exactly by the same percentage due to some factors known as

"tracking error" in technical terms. Necessary disclosures in this regard are

made in the offer document of the mutual fund scheme.



Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those

sectors or industries as specified in the offer documents. e.g.

Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG),

Petroleum stocks, etc. The returns in these funds are dependent on the

performance of the respective sectors/industries.

Tax Saving Schemes:

These schemes offer tax rebates to the investors under specific provisions of

the Income Tax Act, 1961 as the Government offers tax incentives for

investment in specified avenues. e.g. Equity Linked Savings Schemes

(ELSS). Pension schemes launched by the mutual funds also offer tax

benefits. These schemes are growth oriented and invest pre-dominantly in

equities. Their growth opportunities and risks associated are like any equity-

oriented scheme.



Advantages of Equity Capital and Mutual Fund:

Advantages of Equity Capital:

1. High dividend and high value:-

In times of prosperity, the equity shareholders get a very high rate of

dividend, sufficiently higher than that on preference shares. At the same time,

their share value will also go up in the market.

2. Voting rights:-

It is only the equity shareholders who enjoy voting rights on all the policy

matters of the company.

3. Pre-emptive right to new shares:-

Equity shareholders have the pre-emptive right to purchase new shares.

Under the provisions of the companies act, the existing shareholders of the

company have a right to allotment of newly issued shared.



4. Many privileges and rights:-

Equity shareholders enjoy many privileges and rights. For example, they can

vote at meetings, elect directors, control the directors to run the company

efficiently and profitably, look into the books and records of the company

and transfer or sell their shareholdings.



Advantages of Mutual Fund:

1. Professional Investment Management:-

By pooling the funds of thousands of investors, mutual funds provide full-

time, high-level professional management that few individual investors can

afford to obtain independently. Such management is vital to achieving

results in today's complex markets. Your fund managers' interests are tied to

yours, because their compensation is based not on sales commissions, but on

how well the fund performs.

2. Diversification:-

Mutual funds invest in a broad range of securities. This limits investment

risk by reducing the effect of a possible decline in the value of any one

security. Mutual fund shareowners can benefit from diversification

techniques usually available only to investors wealthy enough to buy

significant positions in a wide variety of securities.

3. Low Cost :-

If you tried to create your own diversified portfolio of 50 stocks, you'd need

at least Rs.1,00,000 and you'd pay thousands of rupees in commissions to

assemble your portfolio. A mutual fund lets you participate in a diversified

portfolio for as little as Rs.10,000, and sometimes less. And if you buy a no-

load fund, you pay or no sale charges to own them.



4. Convenience and Flexibility:-

You own just one security rather than many, yet enjoy the benefits of a

diversified portfolio and a wide range of services. Fund managers decide

what securities to trade, clip the bond coupons, collect the interest payments

and see that your dividends on portfolio securities are received and your

rights exercised.

5. Quick, Personalized Service:-

Most funds now offer extensive websites with a host of shareholder services

for immediate access to information about your fund account. Or a phone

call puts you in touch with a trained investment specialist at a mutual fund

company who can provide information you can use to make your own

investment choices, assist you with buying and selling your fund shares.

6. Ease of Investing:-

You may open or add to your account and conduct transactions or business

with the fund by mail, telephone or bank wire. You can even arrange for

automatic monthly investments by authorizing electronic fund transfers from

your checking account in any amount and on a date you choose.



7. Total Liquidity, Easy Withdrawal:-

You can easily redeem your shares anytime you need cash by letter,

telephone, bank wire or check, depending on the fund. Your proceeds are

usually available within a day or two.

8. Life Cycle Planning:-

With no-load mutual funds, you can link your investment plans to future

individual and family needs -- and make changes as your life cycles change.

You can invest in growth funds for future college tuition needs, then move

to income funds for retirement, and adjust your investments as your needs

change throughout your life.

9. Market Cycle Planning:-

For investors who understand how to actively manage their portfolio, mutual

fund investments can be moved as market conditions change. You can place

your funds in equities when the market is on the upswing and move into

money market funds on the downswing or take any number of steps to

ensure that your investments are meeting your needs in changing market

climates.



10. Investor Information:-

Shareholders receive regular reports from the funds, including details of

transactions on a year-to-date basis. The current net asset value of your

shares (the price at which you may purchase or redeem them) appears in the

mutual fund price listings of daily newspapers. You can also obtain pricing

and performance results for the all mutual funds at this site, or it can be

obtained by phone from the fund.

11. Periodic Withdrawals:-

If you want steady monthly income, many funds allow you to arrange for

monthly fixed checks to be sent to you, first by distributing some or all of

the income and then, if necessary, by dipping into your principal.

12. Dividend Options:-

You can receive all dividend payments in cash. Or you can have them

reinvested in the fund free of charge, in which case the dividends are

automatically compounded. This can make a significant contribution to your

long-term investment results.



13. Automatic Direct Deposit:-

You can usually arrange to have regular, third-party payments -- such as

Social Security or pension checks -- deposited directly into your fund

account. This puts your money to work immediately, without waiting to

clear your checking account, and it saves you from worrying about checks

being lost in the mail.

14. Recordkeeping Service:-

With your own portfolio of stocks and bonds, you would have to do your

own recordkeeping of purchases, sales, dividends, interest, short-term and

long-term gains and losses. Mutual funds provide confirmation of your

transactions and necessary tax forms to help you keep track of your

investments and tax reporting.

15. Safekeeping:-

When you own shares in a mutual fund, you own securities in many

companies without having to worry about keeping stock certificates in safe

deposit boxes or sending them by registered mail. You don't even have to

worry about handling the mutual fund stock certificates; the fund maintains

your account on its books and sends you periodic statements keeping track

of all your transactions.



16. Retirement and College Plans:-

Mutual funds are well suited to Individual Retirement Accounts and most

funds offer IRA-approved prototype and master plans for individual

retirement accounts (IRAs) and Keogh, 403(b), SEP-IRA and 401(k)

retirement plans.

17. Online Services:-

The internet provides a fast, convenient way for investors to access financial

information. A host of services are available to the online investor including

direct access to no-load companies. Visit Company Links to access these

Companies.

18. Sweep Accounts:-

With many funds, if you choose not to reinvest your stock or bond fund

dividends, you can arrange to have them swept into your money market fund

automatically. You get all the advantages of both accounts with no extra

effort.

19. Asset Management Accounts:-

These master accounts, available from many of the larger fund groups,

enable you to manage all your financial service needs under a single



umbrella from unlimited check writing and automatic bill paying to discount

brokerage and credit card accounts.

Disadvantages of Equity Capital and Mutual Fund

Disadvantages of Equity Capital:

1. No refund of capital:-

Since equity shares cannot be refunded, excessive issue of such shares may

leads to overcapitalization, particularly when the earning capacity of the

company declining.

2. Benefits only in prosperity:-

During the periods of prosperity, the company has to distribute heavy

dividends on these shares.

3. Manipulation of control:-

Since the equity shares have proportionate voting power, the company’s

management may be vitiated by manipulation of votes, clique-formation,

abuse of proxy rights etc.



4. High risk:-

Equity share holders cannot claim dividend as a matter of right, because the

decision to fit the rate of dividend on equity shares is vested in the Board of

Directors. Therefore investors as a class may find equity shares unsafe,

unattractive and unremunerative.

5. Unhealthy Speculation:-

During the period of boom, the market value of shares will go up, which

leads to unhealthy speculation in the stock market.



Disadvantages of Mutual Fund:

There are certainly some benefits to mutual fund investing, but you should

also be aware of the drawbacks associated with mutual funds.

1. No Insurance:-

Mutual funds, although regulated by the government, are not insured against

losses. The Federal Deposit Insurance Corporation (FDIC) only insures

against certain losses at banks, credit unions, and savings and loans, not

mutual funds. That means that despite the risk-reducing diversification

benefits provided by mutual funds, losses can occur, and it is possible

(although extremely unlikely) that you could even lose your entire

investment.

2. Dilution:-

Although diversification reduces the amount of risk involved in investing in

mutual funds, it can also be a disadvantage due to dilution. For example, if a

single security held by a mutual fund doubles in value, the mutual fund itself

would not double in value because that security is only one small part of the

fund's holdings. By holding a large number of different investments, mutual

funds tend to do neither exceptionally well nor exceptionally poorly.



3. Fees and Expenses:-

Most mutual funds charge management and operating fees that pay for the

fund's management expenses (usually around 1.0% to 1.5% per year). In

addition, some mutual funds charge high sales commissions, 12b-1 fees, and

redemption fees. And some funds buy and trade shares so often that the

transaction costs add up significantly. Some of these expenses are charged

on an ongoing basis, unlike stock investments, for which a commission is

paid only when you buy and sell (see Investor Guide University: Fees and

Expenses).

4. Poor Performance:-

Returns on a mutual fund are by no means guaranteed. In fact, on average,

around 75% of all mutual funds fail to beat the major market indexes, like

the S&P 500, and a growing number of critics now question whether or not

professional money managers have better stock-picking capabilities than the

average investor.

5. Loss of Control:-

The managers of mutual funds make all of the decisions about which

securities to buy and sell and when to do so. This can make it difficult for

you when trying to manage your portfolio. You also should remember that



you are trusting someone else with your money when you invest in a mutual

fund.

6. Trading Limitations:-



Although mutual funds are highly liquid in general, most mutual funds

(called open-ended funds) cannot be bought or sold in the middle of the

trading day. You can only buy and sell them at the end of the day, after

they've calculated the current value of their holdings.

7. Size:-

Some mutual funds are too big to find enough good investments. This is

especially true of funds that focus on small companies, given that there are

strict rules about how much of a single company a fund may own. If a

mutual fund has $5 billion to invest and is only able to invest an average of

$50 million in each, then it needs to find at least 100 such companies to

invest in; as a result, the fund might be forced to lower its standards when

selecting companies to invest in.

8. Inefficiency of Cash Reserves:-

Mutual funds usually maintain large cash reserves as protection against a

large number of simultaneous withdrawals. Although this provides investors

with liquidity, it means that some of the fund's money is invested in cash

instead of assets, which tends to lower the investor's potential return.



QESTIONNAIRE



Name : Occupation:

Age:

Annual Income(approx):

Address:

1. Do you make Investments in the capital market?

Yes____

No____

2. What kind of investment you generally look for

Medium term_____

Long term________

Short term_______

3. What kind of risk and return you generally look for?

High Risk________ High Return________

Low Risk________ Low Return________



4. Have you heard about mutual funds?

Yes____

No____

5. What do you prefer to invest in – Equity or Mutual funds? Give

reason for your answer.

6. Are you aware of the risk and returns in Equity and Mutual funds?

Yes___

No___

7. Do you know about Mutual Funds Schemes? If yes, name few of

them.

8. Which Mutual fund you are investing in and why?

9. Do you invest in tax saving Mutual Funds?

Yes______

No______



10. Name few of the shares in which you have made investment

Analysis from the survey



The questionnaire was filled by the ICICIdirect.com customers. The basis

of the survey was to find out what is a customer’s mentality towards the

investment. Also to find out what is the awareness level of customers for

Equity and Mutual Funds. The age group of the customers varies from 22

to 60 and above. On the basis of the questionnaires filled by the

customers we can draw a rough outline about the investment making

decisions.

In the present scenario, awareness of the stock market is increasing

amongst masses. A person whether investing or not in the capital market,

keep tracks of the market, its volatility, its moves because if not today,

definitely he is going to invest tomorrow. The returns are coming in such

a good way that non investors are getting goose pimples from returns

which investors are getting.



Conclusions

Investors

Some 50 people were included in the survey.

86% of them had made investment in capital market.

14% of them had not invested in capital market but still they were aware

of the Equity market.

Type of investment

62% of the investors were interested in long term investments.

16% of the investors were interested in long term investments.

22% of the investors were interested in short term investments.



We can say that people don’t invest much from long term perspective.

The reason is simple that they don’t want to get their money blocked.

Majority of them invest for short term or medium term only.

Risk and Return

70% of the investors want an ideal investment of low risk and high

return.

20% of the investors are ready to take high risk if they are getting high

returns.

10% of the investors are there who don’t mind in low returns provided

risk is low.

Awareness about mutual funds

90% of the investors are aware about mutual funds. The awareness is

maximum in service class people because of tax saving schemes in

mutual funds.

10% of the investors are still there who are really not aware about the

mutual funds. They have heard of it but don’t know what is it.



62% of the investors were aware about the risk and returns in both

Equity and Mutual Funds.

38% were not aware about the risk and returns in Equity and Mutual

funds.

Mutual Funds Schemes

16% of the investors were aware of the various mutual funds schemes.

84% of the investors were not aware of the schemes. Though they have

heard about the Mutual Funds but knowledge about these Funds is not

there. People don’t even know the procedure of investment in the Mutual

Funds.



Mutual Funds

To name few of the Mutual Funds where in investors have invested their

money, they are as follows :

DSP Merrill Lynch

SBI

UTI

ICICI Prudential

Birla Sun Life

Franklin Templeton

Kotak Mahindra

Prudential ICICI

Tata

Standard Chartered

Reliance

HDFC



Tax Savings Funds

50% of the investors invest in tax savings funds. These are generally

service class people who are working in any service industry.

50% of the investors do not invest in tax savings funds. These are

generally business class or self employed people.

Investment in Equity

Investors do the investment in Equity market on the basis of various

factors like profession, interests, filed in which they are working or doing

business, etc.

A software professional generally invests in software companies because

ICICIdirect.com Vikas Maheshwari 05106

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